North Korean Economy Watch

The CEO of Egypt’s Orascom Telecom, Naguib Sawiris, has made his second visit to the DPRK. You can read about his first visit in January 2011 here.

Pictured above (KCNA): Naguib Sawiris meets with Kim Yong-nam.

KCNA reported that Mr.Sawiris arrived on February 1 (video here):

Pyongyang, February 1 (KCNA) — Naguib Sawiris, executive chairman of the Orascom Telecom Media and Technology Holdings SAE, and his companion arrived here on Wednesday.

On February 2, KCNA reported that Mr. Sawiris met with Kim Yong-nam (video here):

Kim Yong Nam, president of the Presidium of the DPRK Supreme People’s Assembly, met and had a friendly talk with Naguib Sawiris, executive chairman of the Orascom Telecom Media and Technology Holdings SAE of Egypt, and his companion who paid a courtesy call on him at the Mansudae Assembly Hall Thursday.

KCNA reported that Sawiris left on February 3, however, before leaving he praised Kim Jong-il and offered a gift to Kim Jong-un. Accoridng to KCNA:

Naguib Sawiris, executive chairman of the Orascom Telecom Media and Technology Holdings SAE of Egypt, was interviewed by KCNA before his departure from here.

Expressing profound reverence for leader Kim Jong Il, he said:

The Korean people lost a great leader. I also lost the most friendly man. General Kim Jong Il was a great father of the people.

I can never forget the day when I had the honor of being received by him.

While meeting him, I was totally attracted by his humanity.

He was the greatest man possessed of the noblest virtue.

His untimely passing was a great loss not only to the Korean people but to progressive humankind.

He devoted his all to his people with ardent love for the people.

While staying in the DPRK I was deeply moved to visit the Pyongyang Children’s Foodstuff Factory honored with the leadership provided by Kim Jong Il.

He paid deep attention to the operation of the factory.

The tireless efforts made by him for the happiness of the people will be conveyed to posterity for all ages.

The Korean people are energetically pushing forward socialist construction under the sagacious leadership of supreme leader Kim Jong Un.

I sincerely rejoice over the achievements made by the Korean people.

I wish the Korean people greater progress.

I would like to make a positive contribution to boosting the exchange with the DPRK.

His gift to Kim Jong-un remains unknown for now:

The dear respected Kim Jong Un, supreme leader of the Workers’ Party of Korea and the Korean people, received a gift from the executive chairman of the Orascom Telecom Media and Technology Holdings SAE of Egypt.

Chairman Naguib Sawiris handed it to an official concerned on Thursday.

While in the DPRK, Orascom holding announced that it had reached 1 million mobile phone subscribers in the DPRK. According to Bloomberg:

Orascom Telecom Media & Technology Holding SAE, an Egyptian mobile-phone operator headed by billionaire Naguib Sawiris, said its subscribers in North Korea exceeded 1 million.

The Cairo-based company made the annoucement in a regulatory filing today.

The Economist offers some business statistics:

Koryolink earns a gross margin of 80%, making North Korea by far the most profitable market in which Orascom operates. The company has worked hard to court the regime, its chairman travelling to Pyongyang last year to meet the late supreme leader, Kim Jong Il.

North Korean mobile-phone users spend an average of $13.90 a month on calls and text messages, and they tend to pay in hard currency. According to a foreign diplomat, many customers turn up at Koryolink shops with bundles of euro notes. There are even incentives for paying in euros, such as free off-peak calls. This provides foreign currency for a government that craves it.

Mobile-phone customers obtain the hard currency from the informal private trading on which many North Koreans depend. Such business is forbidden, but the government has failed to feed its people, forcing it to turn a blind eye to some capitalist practices. Many insiders benefit: Pyongyang’s “golden couples” consist of a government-official husband and an entrepreneur wife.

Mobile usage now appears to be spreading beyond Pyongyang. The gadgets are a common sight in other cities such as Nampo, not far from the capital, and increasingly are owned by non-officials. As yet, though, only a sixth of the country has a mobile signal.

Martyn Williams has specifics on the corporate structure of the service and service statistics:

The company is operated by Cheo Technology, which is a joint venture between Egypt’s Orascom Telecom Media And Technology Holding (OTMT) and North Korea’s Ministry of Posts and Telecommunications. OTMT holds a 75 percent stake and the North Korean government owns the remaining 25 percent.

Koryolink’s service has popularized cell phones and visitors to Pyongyang say they are now a common site on the city streets. The Koryolink network covers the capital city in addition to 14 major cities, 86 smaller cities, and 22 highways. That equals 14 percent of the landmass but about 94 percent of the population, according to Orascom.

Pictured above: Korea Computer Center, Pyongyang (Google Earth)

According to Mainichi Daily News:

Prosecutors indicted two executives of small trading houses in Nagoya and Tokyo on Wednesday on charges of exporting used personal computers to North Korea in violation of Japanese government trade sanctions.

Lee Mun Ryang, 61, in Nagoya, and Kaoru Morino, 44, in Tokyo, allegedly exported used PCs and other items worth a total of 8.2 million yen to North Korea in June and December 2010, according to the Osaka District Public Prosecutors Office.

The exported goods are believed to have been delivered to the Korea Computer Center, North Korea’s governmental information technology research center set up by late North Korean leader Kim Jong Il.

Both Lee and Morino were quoted by prosecutors as saying they knew that the goods would be delivered to the KCC.

Japan has imposed a total ban on exports to North Korea since June 2009 in protest at its nuclear program.

Lee and Morino began exporting daily necessities to North Korea in 2006, according to investigative sources.

Additional Information:

1. Martyn Williams also wrote about this.

2. In 2010 The Japanese also arrested an individual for exporting pianos to the DPRK.

3. The North Koreans just released several Japanese they were holding.

Read the full story here:
2 executives indicted over PC exports to N. Korea
Mainichi Daily News
2012-2-2

I received another example of the malicious emails that appear in the mail boxes of North Korea researchers. Always be on the lookout for these attempts to hack into your computer:

From: Ben Watkins [mailto:ben.watkins2@aol.com]
Sent: 26 January 2012 08:15
To: [DELETED]
Subject: FW:NKorea,contacts with Iran related to nuclear program in secret

North Korea, contacts with Iran related to nuclear program in secret
January 26, 2011 5:29AM, EST
FULL STORY

© 2012 Daily Cable News Network, LP, LLLP.
All Rights Reserved.
Terms under which this service is provided to you.
Read our privacy guidelines. Contact us.

ATTACHMENTS: image001.jpg

The areas in bold link to a shady server: Xttp://online.newssupply.net/newsviewer.hta.  I changed the “h” in “http” to an “X” to prevent accidentally linking.

You can read more background on these attacks here, here, here, here, and here.

Pictured above is a screen shot from the Uriminzokkiri web page featuring the social networking buttons

According to Yonhap:

North Korea’s government-run Web site began linking posts critical of South Korea to popular social networking sites (SNS) to allow netizens to more easily spread its message online, in its latest effort to step up cyber propaganda.

The official Web site of the Committee for the Peaceful Reunification, Uriminzokkiri, on Monday inserted six SNS icons, including Twitter, Facebook and Korean micro-blogging services, in two postings critical of the South Korean government, according to Yonhap’s monitoring team on North Korea.

Other articles on the site, however, did not include the icons, showing the North’s apparent intention to drive more traffic to specific Web sites when it comes to stories critical of Seoul, the analysis noted.

South Korean authorities ban Web sites containing communist information, illegal under the National Security Law, but some people take advantage of proxy servers to gain access to the blocked sites in the communist state, raising concern that such a bypass will be abused to promote the Pyongyang regime.

Uriminzokkiri (“on our own” in Korean), which opened a Twitter account in August of last year, posts 5-10 messages daily, with 10,000 followers across the world. The propaganda mouthpiece also created its own channel on Youtube, putting up over 1,800 video clips of performances and events by North Korean military and art troupes.

In January of this year, hackers were able to break into Uriminzokkiri’s Twitter and YouTube accounts.

Read the full story here:
N. Korea’s propaganda Web site adds links to SNS sites
Yonhap
Kim Eun-jung
2011-11-14

Pictured above (Google Earth): Changwang street runs north from the Pyongyang Central Train Station to the Potonggang Gate–straight through the Workers’ Party Leadership Compound (AKA the “Forbidden City”)

According to the Daily NK:

As the use of multimedia devices continues to spread among wealthy kids from the Pyongyang elite keen to ride the ‘Korean Wave’ of South Korean cultural influences, it appears that ownership of an Apple i-Pad tablet computer has now also become one symbol of ‘cool.’

The most common and popular multimedia devices used by younger generations in Pyongyang are still MP4 players and DVD playback devices with USB compatibility, of course; however, on Changgwang St. in the very heart of Pyongyang a few people have recently been witnessed wielding the popular Apple machines.

“Notebook computers are pretty common in Pyongyang,” one Chinese businessman who visits Pyongyang 2 to 3 times a year told Daily NK on the 6th, “But i-Pads are now a symbol of wealth; someone in Pyongyang requested one from me for their child.”

“I also witnessed a person using an i-Pad on Changgwang Street and PSM officers did not stop this, while the user did not seem to care about getting in trouble,” the source went on, adding, “There are many foreigners in that area so they are probably trying to adopt a sophisticated image.”

One Orascom official also previously reported witnessing the use of an i-Pad in Pyongyang. However, it is not possible to use the product’s 3G cellular facility in the city as yet.

In an interview with Radio Free Asia (RFA) on the 8th, an official with the Egyptian company stated, “We are planning to develop a SIM card so that I-pads can be used in North Korea by the end of this year,” explaining “There is a 3G network for cell phones in North Korea, so as long as you insert a SIM card you’ll be able to use it.”

Naturally, the internet is not available to domestic users of phones in North Korea either, while the i-Pad is renowned worldwide for its lack of USB ports, too, much less a DVD drive, so while the elite may be obtaining the devices one way or another, only those lucky enough to live abroad can really use them.

iPods have been popular in the DPRK for some time. More than once have tourists been propositioned to give up their portable music devices.

Read the full story here:
Even i-Pads Are in Pyongyang Now
Daily NK
Park Jun Hyeong
2011-11-07

The Nautilus Institute has published a new paper by Alexandre Mansurov on the DPRK’s communication and technology sectors.  The press release and a link to the paper are below:

PRESS RELEASE

The DPRK mobile communications industry has crossed the Rubicon, and the North Korean government can no longer roll it back without paying a severe political price. The most the authorities can do now is probably to manage its rapid expansion in such a way that will ensure that the interests of the political regime and state security are taken care of first.

While traditionally, the State Security Department monitored most communications on a daily basis, the implication of this explosion of mobile phone use is that communication in North Korea has transitioned from a panopticon of total control to a voluntary compliance system where the government makes an example of a select group to try and force the rest of the country to stay in line.

Alexandre Y. Mansourov, a Nautilus Institute Senior Associate, comprehensively examines information technology in North Korea. As of 2008 the regime launched a world-class 3G mobile communications service, which gained almost 700,000 users in less than three years of operation, revealing an insatiable demand for more robust and extensive telecommunications services among the North Korean general population.

Download the report here

About the Nautilus Institute: Since its founding in 1992, the Nautilus Institute (www.nautilus.org) has evolved into a thriving public policy think-tank and community resource. The Institute addresses a myriad of critical security and sustainability issues including the United States nuclear policy in Korea and energy, resource and environmental insecurity in Northeast Asia. Over the years, Nautilus has built a reputation for innovative research and analysis of critical global problems and translating ideas into practical solutions, often with high impact.

For more information, contact the Nautilus Institute at nautilus@nautilus.org or at 415 422 5523.

Here is Yonahp coverage of the report.

“North Korea on the Cusp of Digital Transformation”
Nautilus Institute
Alexandre Mansurov

“North Korea: An Up-and-Coming IT-Outsourcing Destination”
38 North
Paul Tija, GPI Consulting

“NK People Speak, 2011” (Interviews with North Koreans in China)
Daily NK (PDF)

“The Rise and Fall of Détente on the Korean Peninsula, 1970-1974”
Wilson Center NKIDP
Christian F. Ostermann and James Person
(Coverage of the report in the Donga Ilbo can be found here)

Don’t Expect a Pyongyang Spring Sometime Soon
Center for Strategic and International Studies (via CanKor)
Hazel Smith

Pictured above (Google Earth): Korea Computer Center

According to the Associated Press (Via Washington Post):

South Korean police said Thursday they have arrested five people who allegedly collaborated with elite North Korean hackers to steal millions of dollars in points from online gaming sites.

The five, including a Chinese man, were arrested and another nine people were booked without physical detainment after they worked with North Koreans to hack South Korean gaming sites, the Seoul Metropolitan Police Agency said in a statement.

Members of the hacking ring, which included North Korea’s technological elite, worked in China and shared profits after they sold programs that allowed users to rack up points without actual play, police said.

The points were later exchanged for cash through sites where players trade items to be used for their avatars. The police said the ring made about $6 million over the last year and a half.

A police investigator, who declined to be identified because the investigation was under way, said North Korean hackers were asked to join the alleged scheme because they were deemed competent and could help skirt national legal boundaries.

The police pointed to North’s Korea Computer Center as the alleged culprit. Set up in 1990, the center has 1,200 experts developing computer software and hardware for North Korea, the police said.

The National Intelligence Service, South Korea’s spy agency, was heavily involved in the investigation, the police said. Investigators suspect the hackers’ so-called “auto programs” could be used as a conduit for North Korean cyberattacks.

South Korean authorities have accused North Korea of mounting cyberattacks in the past few years. Prosecutors said earlier this year that the North hacked into a major South Korean bank’s system and paralyzed it for days. The North is also accused of mounting attacks on U.S. and South Korean websites. Pyongyang has denied the charges.

The New York Times adds the following details:

In a little less than two years, the police said, the organizers made $6 million. They gave 55 percent of it to the hackers, who forwarded some of it to agents in Pyongyang, the capital of North Korea. “They regularly contacted North Korean agents for close consultations,” Chung Kil-hwan, a senior officer at the police agency’s International Crime Investigation Unit, said during a news briefing.

Mr. Chung said the hackers, all graduates of North Korea’s elite science universities, were dispatched from two places: the state-run Korea Computer Center in Pyongyang and the Korea Neungnado General Trading Company. The company, he said, reports to a shadowy Communist Party agency called Office 39, which gathers foreign hard currency for Mr. Kim through drug trafficking, counterfeiting, arms sales and other illicit activities.

Read the full story here:
South Korean police say they’ve cracked down on ring working with North Korean hackers
Associated Press (Via Washington Post)
2011-8-4

Pictured above (Google Earth): Suspected location of Kaeson Middle School (Google Maps)

According to the Philippine Department of Foreign Affairs:

Foreign Affairs Undersecretary for Policy Erlinda F. Basilio turned over to the Pyongyang Kaeson Middle School a Philippine donation of Philippine and ASEAN books, as well as a computer set consisting of one desktop computer, one laptop computer, and one printer last July 1.

Undersecretary Basilio was in Pyongyang with other Philippine officials to take part in scheduled Policy Consultations with the Foreign Ministry of the Democratic People’s Republic of Korea (DPRK).

Established in August 1960 and located in Pyongyang’s Moranbong District, Pyongyang Kaeson Middle School was designated the Philippines-DPRK Friendship School on 23 August 2010, as part of the 10th anniversary of the establishment of diplomatic relations between the two countries. The school is run by nine officials and 79 teachers, and has a student population of 1,454.

The donation was undertaken in cooperation with the Philippine Embassy in Beijing and the PH-Korea Friendship Society, based in Pyongyang.

The Philippines and the DPRK established diplomatic relations on 12 July 2000.

Additional information:

1. The DPRK routiney names schools and farms as “Country X-DPRK Friendship school/farm”.   For example, the Songyo Secondary School is also the “DPRK-Mongolia Friendship School”.  I have written about “friendship farms” before (here and here).

2. The PH [Philippine]-Korea Friendship Society is an “organization” in the “TaeMun” (대문) portfolio.  대문 is the North Korean abbreviation for 대외문화련락위원회, or in English, the Committee for Cultural Relations with Foreign Countries.  I say “organization” because in reality this friendship society, like all of the others, contains only one or two part-time members.  TaeMun takes its origins from an imported Soviet office named the All Union Society for Cultural Relations with Foreign Countries (Всесоюзное общество культурных связей с заграницей), known in the West by the acronym VOKS (from the Russian “BOKC”).  Historically, its  job was to create sympathetic constituencies in foreign countries and provide the North Korean government with an alternate channel of foreign information, but since the Arduous March they have transformed their mission to focus more directly on resource acquisition.  There is some tension between TaeMun and the DPRK Foreign Ministry.  TaeMun has a web page here.

3. Here are some previous posts on the DPRK-Philippines relationship: here, here, here and here.

Anju’s outdoor market

Voice of America published a series of photos from inside the DPRK. Many of the pictures are from Anju. Looking through them, I saw this outdoor market of which I was unaware.  It did not, however, take too long to find it on Google Earth. The coordinates of the outdoor market are 39.623199°, 125.680848°. Anju and nearby Sinanju both also have one covered market each.  Lots of shoes for sale.

UN Conference on Disarmament
The winner of the “rolling eyes” award this week goes to the announcement that the DPRK has been named to the presidency of the United Nations Conference on Disarmament.  According to the official press release:

In his initial address to the Conference as president, So Se Pyong of the Democratic People’s Republic of Korea said that he was very much committed to the Conference and during his presidency he welcomed any sort of constructive proposals that strengthened the work and credibility of the body. He was ready to work closely with all members to provide the grounds for strengthening their work. As president, he would be guided by the Rules of Procedure and take into account the position of each delegation to find common ground on substantive issues and procedural matters as well. With their support and cooperation, he would do everything in his capacity to move the Conference on Disarmament forward.

I am sure you can think of some recommendations for him!

Canada has since boycotted the committee (2011-7-11).

How to Generate Good Press: Write it
This week the Wall Street Journal’s Korea Real Time had a great post about the North Korean proclivity to purchase advert space in foreign publications and then report “favorable coverage” to the people back home.  “See how much foreigners envy us and out leader[s]”?!

Paying for space in Blitz actually represents something of an economy drive for the Pyongyang publicity machine. Back in 1997, as famine gripped the land, the regime shelled out for some pricier real estate: a full page in the New York Times. That allowed the KCNA to boast that the U.S. newspaper of record had “dedicated one whole page to a special writeup under the title ‘Kim Jong Il Emerges As Lodestar For Sailing the 21st Century’”—with, as the KCNA noted, a large color picture.

Here are five stories from KCNA citing praise in the New York Times: KCNA 1, KCNA 2, KCNA 3, KCNA 4, KCNA 5.  As far as I can tell, the DPRK has never advertised in the Wall Street Journal.  Wouldn’t that be something.

DPRK: There’s an app for that
Martyn Williams writes about Eric Lafforgue’s new iPhone app featuring his pics of the DPRK.  His photo set is here.  Now all we need is a Kernbeisser iPhone app.