Archive for November, 2015

Some Huichon Power Stations go operational on Chongchon River

Tuesday, November 10th, 2015

Huichon-power-station-8

Pictured Above (Google Earth): Huichon Power Station No. 9, site of the opening ceremony

According to Rodong Sinmun (2015-11-9):

Multi-tier power stations on the River Chongchon went operational.

The stations are the labor gifts the Korean people presented to the 70th anniversary of the founding of the Workers’ Party of Korea (WPK) with loyalty.

The 10 multi-tier power stations in the 80 km-long section of the River Chongchon would contribute to the building of an economic power and improvement of people’s living standard.

An inaugural ceremony of the power stations was held at Huichon Power Station No. 9 on November 17.

Present there were leading officials of the party and state, the ministers of electric power industry, metal industry, railways, construction and building-materials industry, electronics industry and machine-building industry, the president of the State Academy of Sciences, the chief secretaries of the provincial committees of the WPK, officials and members of shock brigades who took part in the construction of the power stations and others.

A congratulatory message from the Central Committee of the WPK to the builders, officials and helpers who performed shinning labor feats in building the power stations was conveyed by Pak Pong Ju, member of the Political Bureau of the C.C., the WPK and premier of the DPRK Cabinet.

O Su Yong, member of the Political Bureau and secretary of the C.C., the WPK, said in his inaugural speech that the completion of the 10 multi-tier power stations on the River Chongchon in a short span of time as monumental structures in the era of Marshal Kim Jong Un is of great significance in demonstrating the rapid development of Songun Korea.

The speaker called upon the builders of power stations on the River Chongchon to demonstrate their heroic stamina once again in the all-out drive for presenting a labor gift to the 7th Congress of the WPK with loyalty.

UPDATE: Note that the article does not claim that ALL of the hydro power plants on the Chongchon River are operational. In the March 2016 Korea pictorial magazine, did a feature on Huichon Power Stations Nos. 3, 4, 8, 9, and 11. 1 and 2 were previously constructed. There are construction sites available on Google Earth for plants 5,6,7, and 10, but I am not sure about specific names for each. I am also unsure if the Hyangsan Army-People Youth Power Station near Hyangsan is being renamed and included in the Chongchon River plants.

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North Korean food shortage news roundup: October and November (updated)

Tuesday, November 10th, 2015

By Benjamin Katzeff Silberstein

This summer and fall has seen a somewhat contradictory stream of information about the North Korean food situation. First there were the drought warnings, which were closely followed by regime sources claiming that harvests were actually getting better thanks to agricultural reforms. During the fall, however, the picture painted by multilateral institutions like the Food and Agriculture Organization (FAO) and the World Food Program (WFP) has been one of dire and continued problems.

In early October, the FAO said that North Korea’s staple food production could go down by 14 percent during the year compared to last year, as AFP reported:

North Korea’s staple food production could plummet by 14 percent this year because of bad weather, sparking fears of exacerbating chronic food shortages in the impoverished nation, according to the UN agricultural agency.

The gloomy forecast from the Food and Agriculture Organization comes as the reclusive communist country prepares for a lavish military parade Saturday to mark the 70th anniversary of the ruling Workers’ Party.

The North is expected to produce 3.7 million tonnes of rice and corn this year, down from 4.3 million tonnes last year, according to a report from the FAO early warning system.

Pyongyang plans to import 500,000 tonnes of rice and corn from abroad, the FAO said, but it will not be enough to feed its 25 million people.

The country, plagued by regular droughts, will face a total shortfall of 1.2 million tonnes of its staples.

State media reported in early June the country’s main rice-growing areas had been badly hit by the “worst drought in 100 years”.

North Korea saw significant rainfall later, but analysts said the prospects for this year were still grim.

Full story here:
North Korea food production could drop 14%: FAO 
Yahoo News/AFP
10-9-2015

Later last month, the FAO reiterated its concerns over North Korea in its yearly report on the state of agriculture in the world. Voice of America:

More than 26 percent of children in North Korea’s countryside are underweight, a U.N. Food and Agriculture Organization report says.

The agency, in its recently released “State of Food and Agriculture 2015” report, also estimated that there are twice as many undernourished children in the communist country’s rural areas as in its cities.

Andre Croppenstedt, an FAO researcher who wrote the report, told VOA that “it’s normal to have a much higher percentage of children underweight in rural areas as opposed to urban areas,” but that the gap “is perhaps a little larger than usual” in North Korea.

The North Korean ratio is the 24th highest among the 123 low-income developing countries. Among East Asian countries, North Korea’s ratio ranked fifth, after East Timor, Cambodia, Papua New Guinea and Laos.

Read the full story here:
FAO: 1 in 4 Rural North Korean Children Underweight
Kim Hyunjin
Voice of America
10-22-2015

And last month, WFP announced it was extending its aid to North Korea over next year due to expected food shortages. Voice of America again:

The United Nations’ food agency plans to extend aid to North Korea amid reports that the communist country is facing food shortages next year.

Damian Kean, a regional spokesperson for the World Food Program (WFP), told VOA this week the agency plans to extend the current food aid program for another six months.

“This current program cycle is supposed to be finished this December. What we decided to do is to extend the program until the middle of next year,” said Kean.

He added that the agency needs an additional $23.3 million to fund the extension.

The WFP is conducting an assessment of the nutritional status of North Koreans to determine if further assistance is needed after June of next year, Kean said.

The agency launched a two-year food aid program in July 2013, and it had already extended the program through the end of this year.

According to Kean, the food shortages are affecting the most vulnerable groups, including young children and pregnant women.  More than 30 percent of North Korean children under five are experiencing stunted growth because of malnutrition, and more than a third of pregnant women and breastfeeding women are suffering from anemia.

Full story here:
UN to extend aid to North Korea
Kim Hyunjin
Voice of America
11-03-2015

This all suggests, as one might have expected, that North Korean claims of successful agricultural reforms may not have been the whole truth. At the very minimum, had such reforms had a strong and positive impact, harvests shouldn’t be declining compared with last year. Or harvests could just be stronger than what they would have been after the drought absent economic reforms. In any case, North Korean claims of a growing harvest do not seem to have held out.

UPDATE 10-10-2015:

Marcus Noland at the Peterson Institute’s Witness to Transformation Blog offers an interesting theory on these numbers: they aren’t that bad when compared with output over the last decade.

Last week Yonhap ran a story titled “N.K. may suffer severe food shortage next year: S. Korean expert” in which Kwon Tae-jin, formerly of the Korea Rural Economics Institute and now at the GS&J Institute, argued that North Korea may be facing its greatest food shortage of the Kim Jong Un era. Numerous articles, citing reports from the UN system, have highlighted high rates of malnutrition, particularly among vulnerable groups such as children.

The problem is that while the situation appears to be deteriorating relative to last year, as shown in the chart above, the FAO forecast of actual food availability per capita for 2015-16 actually represents a slight improvement over conditions for most of this decade.

Detailed data from the FAO displayed in the table below confirm that while production is forecasted to decline for coarse grains, maize, and rice, only in the case of rice is output forecasted to be below the 2011-13 average, and in this case, increased imports are expected to offset most of the shortfall.

Full story here:
Is North Korean food insecurity being hyped? 
Marcus Noland
Witness to Transformation
10-10-2015

What I wonder still is what this says about the progress of reforms, even if the figures aren’t particularly alarming. Also, the trend has been an increase in harvest figures over the past few years. So even if these figures aren’t particularly out of range, they still go against a trend of growth.

 

UPDATE (11-27-2015): Daily NK interviews one person in the country who says that this year saw a bumper harvest despite weather conditions, but not thanks to state reforms. The article says it’s not thanks to increases in collective farm harvests that things are going better, but because those tending individual plots have found better farming methods:

However, the number of people working hard to ensure the success of the rice harvests on collective farms is dropping. This is in large part due to the fact that despite reassurances from the state that farmers will receive sizable allocations of the harvest for their own use, for the past several years this has not been the case.

After “repeated failures by the authorities to fulfill stated promises,” he asserted, farmers have concluded that it makes no difference to them personally whether the collective farms do well or not.

Read the full article:
Despite Mother Nature, a bumper year for rice harvest
Lee Sang Yong
DailyNK
11-26-2015

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Civilian inter-Korean exchanges up in latter half of 2015

Monday, November 9th, 2015

According to Yonhap:

The number of South Koreans visiting North Korea has shot up since the two Koreas reached a deal in August to spur inter-Korean civilian exchanges, government data showed Monday.

The number of South Koreans who traveled to the North reached 418 in the January-September period, excluding those who moved in and out of the joint industrial park in the North’s border city of Kaesong, according to the data by the Unification Ministry.

But in October alone, the number of such people came in at 880 as the two Koreas held several joint events such as an inter-Korean project to excavate the ancient palace site and a workers’ football friendly.

The October tally did not include the South Koreans who crossed the border for the reunions for families separated by the 1950-53 Korean War, held on Oct. 20-26.

The increase in such exchanges is due to the two Koreas reaching a landmark deal on Aug. 25 to defuse military tension.

The value of humanitarian assistance to North Korea has also increased, according to the ministry.

In April, the government gave approval to Ace Gyeongam, a foundation run by bed maker Ace, to send fertilizer to North Korea for the first time since 2010, when Seoul imposed sanctions on the North over a deadly warship sinking that year.

Ace Gyeongam also provided a small amount of fertilizer and other assistance needed for a greenhouse project in North Korea last month.

South and North Korea saw more vibrant civilian exchanges, but there has been no progress over high-level talks as the North has not responded to South Korea’s proposal to have preparatory contact for such inter-Korean dialogue.

Read the full story here:
Civilian inter-Korean exchanges on the rise: data
Yonhap
2015-11-9

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The recent consumer goods exhibition reveals qualitative change

Friday, November 6th, 2015

Institute for Far Eastern Studies (IFES)

According to the KCNA, the 26th National Exhibition of Consumer Goods, the National Exhibition of 206 Sundry Goods, and the National Exhibition of August 3 Consumer Goods were held in Pyongyang from October 26 to 30.

The news evaluated these exhibitions to “feature a growing number of varieties in consumer good than in the past, with noticeable qualitative change.” At the exhibition, hundreds of thousands of products were showcased that included knitted products, footwear, and food products.

Among the displayed products, Ryuwon Shoe Factory and Pyongsong Synthetic Leather Factory were acclaimed for their products with 1.25 times more shoes compared to last year’s exhibition. In recent years, factories under the guidance of the Shoes Industry Management Bureau in the Light Industry Ministry create new factories or modernized the existing factories and are reported to be producing high-quality footwear with new products under development.

In addition, the exhibition presented new technology registration review process, to shorten technology updating cycle and to speed up new product development.

Various products made by the branch academy of Light Industry and the Nonferrous Metals Research Institute under the National Academy of Sciences were newly registered under the new review process that included functional cosmetics, antibacterial wipes and other antibacterial goods, and “high-purity” silver goods, etc.

On the other hand, as the living standards of North Koreans are improving, more and more North Koreans are now seeking goods that are eco-friendly, tech-savvy, and health-conscious. Medical goods were popular items in North Korea in the past but today health foods are more in demand. This year there were more high-tech products, such as diesel engines that feature energy-saving and environment-friendly goods, than everyday items.

In the past, North Korean ginseng, sea cucumber, honey and other traditional products were mainly exhibited in these exhibitions. But now, there are more companies that are displaying goods that demonstrate advancement in science and technology and locally produced products.

While commercial advertisements are rare in North Korea, the annual spring and autumn consumer good exhibitions are an exception to this. There are a great number of ads on these exhibitions and many North Koreans are seen taking a souvenir photo next to their favorite ads.

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New taxes to kick in for KIC firms

Wednesday, November 4th, 2015

According to Yonhap:

South Korean firms operating in North Korea are required to pay a land use fee starting this year, officials here said Wednesday, after a decade of exemption.

The relevant authorities of the two Koreas will soon begin talks on how much more the 120 South Korean companies in the Kaesong Industrial Complex should pay, they added.

Launching the facilities in 2004, the North agreed to exempt the South from a land use fee for a decade. The measure expires this year.

“It’s a kind of tax to be paid once a year,” a Unification Ministry official said. “Thus, the North’s Central Special Development Guidance Bureau and the South’s Kaesong Industrial District Management Committee should begin consultations before long.”

The two sides recently ended months of negotiations on the level of wages for around 53,000 North Korean workers in the Kaesong zone near the inter-Korean border.

They agreed on a 5-percent increase in minimum wages from US$70.35 a month.

Read the dull story here:
S. Korea to pay ‘tax’ for Kaesong complex
Yonhap
2015-11-4

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Factory owners rent out unused space

Monday, November 2nd, 2015

According to the Daily NK:

Recently in South Pyongan Province, the practice of renting out sections of state-run factories to individual entrepreneurs is taking off. This latest development is further evidence of de facto private enterprise flourishing on the back of state facilities.

“There is a factory that manufactures coal mining equipment located in a building that is now partially rented to a donju [literally ‘money masters,’ or new affluent middle class] who is making shoes there. By renting out the building, the authorities can also make ‘a little extra’, which is a nice benefit for them,” a source in South Pyongan Province reported to Daily NK on October 27.

“‘A little extra’ refers to profits falling outside of enterprise work quotas utilizing state labor and raw materials.”

An additional source in the same province corroborated this news.

She added that the officials in charge of the factory must first make sure that they will be able to sell enough of the extra goods manufactured by the donju on the market to make it worth their while. If they calculate that it will be a profitable good to sell, they go ahead and agree to rent out part of the factory warehouse.

Winter is, without fail, a busy season for shoe markets in North Korea. Demand explodes for cotton wool and fur shoes to prevent frostbite. North Koreans put cotton wool into black or army green cloth to make shoes known as “Tong (a mispronunciation of the word Chinese-derived word in Korean meaning ‘winter’) Shoes”. Fur shoes are boots made of synthetic leather and stuffed with compressed cotton wool or sheep wool.

As North Korea’s primary shoe factories, “Pyongyang Shoe Factory” and “Sinuiju Shoe Factory” receive a quota for the number of shoes they should produce to distribute seasonally, they cannot adjust their production levels to meet actual market demand. This leaves a hole in the market the donju are keen to step in and fill.

What really determines the quality of wool or fur shoes is the sole. The donju buy rubber in the general markets and hire laborers to construct soles from it in, as might be expected, exceedingly unsafe work environments. With no access to safety masks, let alone other protective gear, workers inhale overwhelming quantities of noxious gases in the process.

Nonetheless, workers eager to do the job are never in short supply– those hired for the task are paid who wages 2-3 times that of typical day laborers working for the donju.

Although it is possible to sew the leather outer parts and midsoles of shoes at home, proper equipment is required to produce quality insoles. Rubber is pulverized, reconstituted using a machine, and then mixed with fresh rubber to fabricate insoles. However, a compressor is needed to complete this task, which is where the factories come in.

These days, although it is possible to earn a fair amount of money producing goods at home, “if you’re more ambitious and want to enter into large-scale production you’ll run into an electricity supply problem,” the source noted.

“While it can be said that utilizing the unused space of factories contributes to national production, in the end it’s really the factory’s supply of electricity that proves to be the lure.”

In fact, the first thing donju check when scouting a factory to approach is that the facility has a stable power supply. If all on this front checks out, the donju seek out the cadres in charge and set up a contract stipulating that said entrepreneur pay 30% of his or her profits from the sale of goods produced in the factory as rent.

The factories involved in these deals are typically those associated with the coal mining industry. These enterprises produce the majority of the equipment used in North Korea’s coal mines, and because iron is the most used raw material in the production of the related equipment, such factories receive a larger allotment of electricity than typical light industry factories.

There are, of course, other types of factories receiving steady streams of electricity, but for the time being, they are off limits, according to the source. By way of example, the source explained that because munitions factories harbor a litany of “national secrets, ordinary citizens cannot access them no matter how much money they spend.”

And yet, the fact that North Korea’s donju are now turning their focus towards the production of consumer goods can be interpreted as yet another sign of North Korea’s ever-expanding marketization.

She analyzed these trends as follows: (1) as the relative purchasing power of North Korea increases, demand is increasing as well; (2) markets are developing within North Korea, and state-operated stores are also being rented out and run as de facto private operations; (3), the number of retail outlets selling consumer goods is skyrocketing; (4) the use of ‘servi-cha’ has especially improved the distribution process; and (5) compared to goods directly imported from China, the price competitiveness of local goods has improved as well.

In the past, North Korea’s foreign-currency earning enterprises or the donju would go to Zhejiang Province in China or other regions with low labor costs and import large quantities of consumer goods at low prices to distribute within North Korea.

However, these cheap goods fall short of satisfying the market preferences of North Korean citizens today, the source concluded.

Read the full story here:
As factories rent out space, donju move in and set up shop
Daily NK
Seol Song Ah
2015-11-2

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DPRK tourism revenue estimates

Sunday, November 1st, 2015

According to Yonhap:

North Korea earned tens of millions of dollars from foreign tourists in 2014, around half of the hard currency it won from the lucrative inter-Korean industrial park, a researcher said Sunday.

North Korea’s income from foreign tourists is estimated at US$30.6 million to $43.6 million last year, considering about 95,000 Chinese tourists and 5,000 tourists from Western countries visited the country, Yoon In-ju of the Korea Maritime Institute said in a paper.

North Korea’s annual income from the Kaesong Industrial Complex in the North’s border town of Kaesong, accommodating 124 South Korean firms that employ more than 50,000 North Korean workers, reached $86 million in 2014.

North Korea has launched a drive to woo foreign tourists since leader Kim Jong-un assumed power in 2011 by introducing a variety of tour packages that give participants sports, military and labor experiences.

North Korea, however, lacks enough infrastructure, such as transportation and lodgings, to attract foreign tourists, Yoon said, adding the North’s policy of allowing only group tours and limiting tourist destinations also serve as obstacles to foreigners investing in infrastructure, as well as tourists.

I have not read the report, and have been unable to find a copy in English, but I want to highlight that there is a difference in the kind of revenue that is earn from tourism versus from the KIC.

The KIC earns $US in cash, which are delivered from the South Koreans to the North Korean government. Because South Koreans cover all the expenses in the KIC, the DPRK government’s gross take effectively equals net take (100% of proceeds). However with tourism, gross take  is not what the government actually receives. Tour operators take a cut, KITC takes a cut, guides take a cut, restaurants and hotels take a cut. Local governments take a cut. Of course how the average tourist dollar is divided up remains a mystery, but it is not anywhere near the government’s 100% share that the KIC draws.

This distinction may have been addressed in the paper, but the Yonhap report did not make that clear.

Read the full story here:
N. Korea’s income from tourism half of that from Kaesong complex
Yonhap
2015-11-1

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