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Pyongyang Information Center (PIC)

Monday, December 6th, 2010

Pictured Above (Google Earth): Pyongyang Information Center and Annex

Choi Sung, Professor of computer science at Namseoul University, writes in the IT Times:

I have been writing about North Korea’s IT industry since the start of this year. In this installment, I would like to introduce North Korea’s major information and communications institution. If the Choson Computer Centre (KCC) is called the centerpiece of North Korea’s IT R&D, Pyongyang Information Centre (PIC) is the mecca of their software development. The PIC, founded on July 15, 1986, was jointly funded by the United Nations Development Programme (UNDP) and Jochongnyeon (the pro-Pyongyang federation of Korean residents in Japan). It is situated in Kyong-Heung dong near the Botong River in Pyongyang.

The PIC was created as the Pyongyang Program Development Company and changed its name to Pyongyang Electronic Calculator Operator in October of 1988 and then again to Pyongyang Information Centre (PIC) in July of 1991. As of now, the best and the brightest of North Korea’s IT talent is developing various kinds of programs and devices at the PIC: nearly 300 IT professionals, who graduated from the North’s most prestigious universities such as Kim Il-sung University, Kim Chaek University of Technology and Pyongyang University of Science and Technology (PUST), are on the payroll of the PIC.

On the overseas front, the PIC has its branches in China, Japan and Singapore, where PIC IT experts are working on software development, and has teamed up with foreign companies to jointly develop software programs and expedite technology transfers. The PIC, North Korea’s major software developer, has been at the vanguard of these following areas: language information processing, machinery translation, document editing, global IMEs (Input Message Editor), computer-aided design (CAD), networks, database systems, fonts, multimedia, dynamic images, etc. For instance, the PIC’s database development taskforce consists of about 40 IT experts, who are all working on the development of information management systems for production lines, companies and other institutions. The PIC’s publishing group has been engaged in various R&D projects from the development of Chang-Deok, a PC word processor, to DTP (desk top publishing) systems for Mac computers. Last but not least, the PIC’s application software group is keen on CAD, virtual reality and the development of project management devices. The PIC has been developing a plethora of software products: embedded software, CAD, image processing, Korean-language information processing and systems, network management systems, multimedia dynamic images, etc. The PIC’s 3D CAD has been widely employed by North Korean and foreign architectural design companies and more sophisticated versions of it are coming out. What’s more, the PIC is ramping up its joint R&D efforts with overseas IT developers with a focus on the development of diverse image processing programs. Korean-language information processing and systems are about developing the technologies for character recognition, voice recognition, natural language processing and primary retrieval while the development of network management systems includes fire walls, security solutions, encryption, e-commerce, IC cards, instant messenger programs, mobile game programs, etc. They are also working on the development of multimedia and dynamic images: technologies for producing 3D materials, 2D cartoon production and the technology for adding accompaniments to images are being developed. The PIC’s font development team has developed 300 Korean fonts and a myriad of calligraphic styles for imported mobile phones and dot fonts for PDAs.

The PIC has thus far scaled up its IT exchanges with overseas information and technology companies as well as R&D institutions. A case in point is the North-South joint venture, HANA Program Center, which is located in Dandong-si in Liaoning, China and was jointly invested in May of 2001 by the PIC and North-South HANA Biz, a subsidiary of South Korea’s Dasan Network. Another showpiece of the PIC’s effort for joint R&D is the software development for fonts and Chinese character recognition in collaboration with Soltworks (an e-publishing software developer). On top of that, the PIC’s IT exchanges with overseas institutions have been on the rise.

As such, inter-Korean cooperation projects will serve as the driving force behind the PIC’s IT exchanges with South Korea. To that end, non-military sanctions imposed on Pyongyang should be eased, such as the Wassenaar Arrangement (a multilateral export control regime (MECR) with 40 participating states) should be eased to move US – North Korea relations forward and the US’s EAR (Export Administration Regulation) on the North should be scaled back. Above all, IT-initiated unification of the two Koreas should be preceded by pragmatic dialogues with the North and North Korea’s efforts for reaching out to other nations. As of now, the North needs to draw up a future blueprint to embark on phased cooperation with the S. Korean government and companies in a bid to open its doors to the international community.

UPDATE from a reader who has spent some time there:

[T]hey are an interesting institution that not everyone has a chance to see from the inside. What was interesting is that they really work on software for foreign markets (i.e. mobile software for well known international cell network providers). In addition to that they have an impressive library of books on all topics of software development which was up-to-date at the time I visited.

In contrast to the other institutions they immediately showed commercial accomplishments instead of where the leaders have walked. Employees have access to a gym too. A place out of place in Pyongyang. What I found interesting in the article is that the mentioned developments match some of those the KCC presents in their building. The PIC made much more an impression of a service unit for foreign customers than for the country itself. However, they are training hardware specialists for the infrastructure there.

Read the full story here:
North Korea’s IT Application Software Development Center – Pyongyang Information Centre (PIC)
IT Times
Choi Sung
12/6/2010

Posted in Chongryun, Computing/IT, Japan, Pyongyang International Information Center of New Techn, UN, UNDP | Comments Closed

DPRK comments at the International Conference of Asian Political Parties in Phnom Penh

Monday, December 6th, 2010

According to the Daily NK:

In yet another hint as to Kim Jong Eun’s true status, Secretary of the International Department of the Chosun Workers’ Party Kim Young Il pointed to the beginning of the leadership of the successor at a recent conference in Cambodia.

Alongside politicians from 31 Asian states including South Korea, Kim was attending the 6th International Conference of Asian Political Parties in Phnom Penh on December 2nd as the head of the Chosun Workers’ Party delegation. There, according to Rodong Shinmun, Kim used his speech to explain, “At the Workers’ Party Delegates Conference, we appointed respected Comrade General Kim Jong Eun to Vice Chairman of the Central Military Commission of the Party.”

Kim also made several further mentions of the results of the Delegates’ Conference. Speaking of Kim Jong Il, he said “Our great leader, Comrade Kim Jong Il continues as General Secretary of the Chosun Workers’ Party…”, but by using the most honorary of terms like “respected”, he appeared also to emphasize the fact that the era of Kim Jong Eun has begun.

Chosun Central News Agency also reported the details of Kim’s speech on December 4th, emphasizing the words, “Every member of the Party and the people, with the great pride and self-respect of having a man of unsurpassed greatness at the highest level of the revolution, celebrated the 65th anniversary of the founding of the Chosun Workers’ Party splendidly last October; a great political festival to be spoken of as a special event in our people’s history.”

Given the context of the Korean used, it appears that the “man of unsurpassed greatness” refers to Kim Jong Eun.

Also, Kim reportedly added, “The nation’s economic power is being strengthened by the creation of Chosun-style iron, textiles and fertilizer, while we have seized control of the foundations of CNC technology; the most advanced CNC-equipped factories are being built constantly.”

Synthesizing these reports coming from Rodong Shinmun and Chosun Central News Agency and based on the fact that a major Party figure participating in an international conference should talk of Kim Jong Il and Kim Jong Eun in the same breath suggests the formalization of the Kim Jong Eun succession to power

Especially, Kim Young Il mentioning CNC, which the North Korean authorities are promoting as an amorphous “achievement” of the successor is seen in some quarters as tantamount to an announcement that Kim Jong Eun’s leadership has began. Recently, North Korea has allegedly been encouraging the expansion of CNC technology into most industrial fields.

Kim Yeon Su, a professor at National Defense University in Seoul, explained to The Daily NK, “This is to proclaim to the outside world that Kim Jong Eun has advanced to the successor’s position and that he has begun to lead.”

Professor Kim commented, “During the South Korea-U.S. joint military exercises in the West Sea (November 30th~December 1st), Kim Jong Il went on an on-site inspection without Kim Jong Eun. This is a very exceptional incident and an expression of trust in Kim Jong Eun and confidence, suggesting that the Kim Jong Eun succession leadership system is ready.”

Meanwhile, also during his speech, Kim Young Il repeated existing arguments that the shelling of Yeonpyeong Island was based on the right to self-defense, and asserted that responsibility for it lies with South Korea.

Read the full story here:
“A Man of Unsurpassed Greatness”
Daily NK
Kim So Yeol
12/6/2010

Posted in Cambodia, CNC, Kim Jong Un, Light Industry, Manufacturing, Political economy, Worker's Party | Comments Closed

Arduous March continues to take toll on DPRK population

Monday, December 6th, 2010

According to the Choson Ilbo:

The demographic graph of a normal country has a pyramid or bell shape. But that of North Korea reportedly has an abnormal gourd-shaped curve. The narrow part in the middle of the curve accounts for the key age group between 20 and 34 of the economically active population in the North. It is believed that is because many of those born in the 1990s in the midst of economic difficulties and food shortages died of malnutrition or diseases when they grow up.

This was revealed on Monday by Hwang Na-mi, a researcher at the Korea Institute for Health and Social Affairs, in the outcome of her analysis of a 2008 census report the North’s Central Statistics Bureau submitted to the UN Population Fund (UNFPA). The North’s demographic graph shows that the “population between 20 and 34 years of age remarkably dwindled compared to teens or those in their 40s,” she said.

Lee Ae-ran, a professor of food, nutrition and cuisine at Kyungin Women’s College, said, “As economic problems worsened in the 1990s, many young North Koreans avoided marriage and childbirth and illegal abortions were rampant. Especially in the late 90s, many children and youths starved to death in urban areas, as well as in rural regions.” She is the first female North Korean defector to obtain a doctoral degree in the South.

The North’s 2008 census was conducted according to international standards with the help of the UNFPA, and thus it is regarded as reliable statistics on the status of North Korean population.

The North conducted its first-ever census in December 1993. But the categories did not conform to international standards, nor were the results consistent.

The North’s infant mortality rate, which is considered a yardstick for gauging a country’s socio-economic level and health, was 19.3 per 1,000 infants younger than 1 year, up 5.2 from 14.1 in 1993. However, some experts speculate that such a rate in the North is not as serious as it has been known so far.

According to the “2010 World Population Report” published by the UNFPA last month, the North’s infant mortality rate is 47 per 1,000, pushing the country to 51st place among 181 countries.

The North’s maternal mortality rate, the rate of mothers who die during pregnancy or childbirth, was 77.2 per 100,000, far up from 54 in 1993. The Stalinist country’s average life expectancy was 69.3 years in 2008, down from 72.7 years in 1993.

Past stories about the DPRK’s 2008 census can be found here, here, here, and here.

The officially published data can be found here. Summaries can be found here.

Read the full story here:
N.Korea’s Youth Population Dwindles Due to Food Shortage
Choson Ilbo
12/6/2010

Posted in Demographics, UN, UN Population Fund | Comments Closed

KCNA re-launched on DPRK-owned IP address

Monday, December 6th, 2010

UPDATE 4 (12/6/2010): Martyn Williams informs us that the new KCNA web page has undergone a second round of changes:

Also new is the addition of Korean-language articles to the previously-available English and Spanish news.

The front page includes an image, the day’s headlines and links to seven category menus. I had problems with some of the links and the menus when accessed via Firefox, but they function with Internet Explorer.

It still has to be accessed via an ugly all-numeric address but new is a copyright line that states:

Copyright © 2000-2010 by www.star.edu.kp all rights reserved.

This is the first time I’ve seen the name “www.star.edu.kp.” The Star could refer to “Star JV,” the DPRK-Thai joint venture that runs the North Korean IP address space. That company is planning to use “www.star.net.kp” for it’s own homepage. But the “edu” typically signifies an educational domain.

At present all KP domain names remain offline. The German server that was responsible for serving the dot-kp top-level domain has been offline for several months.

Because this is the second of an unknown number of versions, I will call this “new KCNA v2.”

Below is a screen shot of the original version:

Photo from Martyn Williams

UPDATE 3 (10/21/2010): Martyn Williams reports that the South Korean government is now blocking the new North Korean web pages.

Internet users in South Korea had been able to access the website earlier this week, but as of Thursday attempts to connect are redirected to a National Police Agency page that warns the site’s content is prohibited in South Korea.

The blocking isn’t a surprise. About 30 Web sites with North Korean connections have been blocked for several years by the South Korean government. They include a similar site operated from Tokyo that, like the new site, carries news in English and Spanish from the official Korea Central News Agency (KCNA).

UPDATE 2: More in the comments.

UPDATE 1: You can see the new KCNA here (hat tip to “PR”).

ORIGINAL POST: Martyn Williams writes in Computer World:

North Korea appears to have made its first full connection to the Internet. The connection, planning for which has been going on for at least nine months, came as the reclusive country prepares to mark the 65th anniversary of the founding of the ruling Workers’ Party of Korea with a massive celebration and military parade.

A Web site for the country’s official news agency [KCNA] was the first to appear from among a group of 1,024 Internet addresses that had been reserved for North Korea but never used. The Korea Central News Agency’s new Web site is different from one operated by a group in Tokyo and carries news and photos a day ahead of the Japanese site.

Other North Korea-linked Web sites and a recently launched Twitter feed operate from locations outside the country or via direct connections to China’s national Internet.

The site appeared as Pyongyang welcomed foreign journalists to the city to observe Sunday’s parade. A press room for the journalists was set up at the Koryo Hotel and reporters were given full access to the Internet. Typically visitors to Pyongyang are only able to make telephone calls or send e-mails through designated computers.

“The North Korean IT guys at the press room really know their stuff. We’re logged on,” wrote Melissa Chan, a correspondent for Al Jazeera, in a Twitter message.

She later appeared live on the channel via a Skype link.

“We have access to Facebook, Twitter and here I am able to Skype with you,” she said.

The access is extraordinary for a country that keeps such tight control on how its citizens communicate.

While Internet access is believed to be available to small group of elite members of the ruling party, the rest of the country is not permitted access to outside sources of news.

Radios are pre-tuned to state broadcasts, magazines and newspapers from other countries are banned and the only Web access available is to a nationwide intranet that doesn’t link to sites outside of the country. As PCs are unusual at home, most access is via terminals in libraries.

The first signs of a greater interest in the Internet came late last year when a batch of Internet addresses, long reserved for North Korea, were assigned to a North Korean-Thai joint venture.

The numeric IP addresses lie at the heart of communication on the Internet. Every computer connected to the network needs its own address so that data can be sent and received by the correct servers and computers. Without them, communication would be impossible.

Frequent monitoring of the addresses by IDG News Service repeatedly failed to turn up any use of them until now.

An analysis of the connection to the news agency Web site shows it is connected to the wider Internet via China Netcom.

It’s impossible to tell if the access given to journalists in Pyongyang marks a turning point in the way the country regulates access to communications, or if it’s simply a courtesy made available to create a good impression among journalists.

The founding anniversary of the Workers’ Party of Korea is a big deal for the country every year, but this year is especially important. Kim Jong Eun, son of leader Kim Jong Il, has just taken his first position within the party, which rules North Korea. His appointment to the party’s Central Committee and the Central Military Commission are first steps towards a likely future position as leader of the country.

I have had a hard time locating the new web page (Google has not scraped it), but I will post it here soon.

The KCNA site run by the Chongryon in Japan is here. The new version also seems to offer both English and Spanish versions.

Read more here:
North Korea opens up Internet for national anniversary
Computer World
Martyn Williams
10/9/2010

…and Martyn’s personal web page: http://www.northkoreatech.org/

Posted in Chongryun, Communications, Internet, Japan | 7 Comments »

DPRK-PRC trade up 26.7 percent

Friday, December 3rd, 2010

Institute for Far Eastern Studies (IFES)
NK Brief No.10-12-3-2
12/3/2010

North Korean trade with China has jumped 26.7 percent during the first eight months of the year, with the bulk of its imports made up of crude oil, and its largest export being coal. Despite the increasingly severe food shortages in the North, food imports from China were actually down 7.5 percent, while on the other hand, fertilizer imports shot up by 162 percent.

The Korea Trade-Investment Promotion Agency (KOTRA) looked into the Chinese government’s import and export figures and determined that North Korean exports to China during the first eight months of the year were worth 650,000 USD, 20.6% more than during the same period last year, while DPRK imported 1.345 billion USD-worth of goods (30% increase), for trade worth a total of 1.995 billion USD, 26.7 percent more than 2009.

“Mineral fuel and mineral oil” topped the list of North Korean imports (321,000 USD), with crude oil (229,000 USD) and oil (63,000 USD) making up 90.7 percent of imported goods. However, while crude imports were 53 percent more expensive, the amount of oil imported only rose by 2.3 percent; the sharp increase in expenditure was due to climbing international oil prices. The second- and third-largest imports were listed as “nuclear reactor, boiler, and machinery” (127,000 USD) and “electromagnetic machinery, sound and video equipment” (106,000 USD). Other imports included cars and car parts, steel and steel goods, plastic and plastic goods, artificial filament, fertilizer, and grain. A KOTRA official stated that while “nuclear reactor” was listed among the goods imported by the North, there is no way to verify the Chinese statistics.

North Korea’s grain import expenditures increased by five percent, to 34,000 USD, but overall grain imports fell 7.5 percent, to 102,000 tons, due to increased costs. More specifically, rice import expenditures were up 8.4 percent to 16.6 million USD, but the amount of rice imported fell by six percent, to 38,400 tons. Corn expenditures dropped by one percent to 16.3 million USD while the amount imported fell by ten percent, to 62,000 tons. The cost of barley imports grew 190 percent, to 353,000 USD, with the amount of barley brought into the country up 89 percent to 1,011 tons. 277,000 tons of fertilizer were imported, 162 percent more than last year, at a cost of 40 million USD, 85 percent more than 2009. Almost all of the fertilizer was nitrogenous.

North Korea’s exports to China were made up largely of mining and fisheries. Coal topped the list (191,000 USD), although the amount sent across the border was 31 percent less than last year. Iron ore was second, and was not only down by 34 percent, it brought in 134 percent less than 2009, as it was worth only 111 million USD. Textiles and accessories worth 81 million USD, steel worth 64 million USD, and mollusks worth 32 million USD were also sent to China.

Posted in China, Coal, Energy, Food, Institute for Far Eastern Studies, International trade, Korea Trade-Investment Promotion Agency (KOTRA), Oil, Statistics, Trade Statistics | Comments Closed

ROK financial transfers to the DPRK

Friday, December 3rd, 2010

According to the Choson Ilbo:

South Korea gave North Korea an astronomical US$2.98 billion during the Kim Dae-jung and Roh Moo-hyun administrations from 1998-2008, according to a government tally announced Thursday. That is 1.5 times more than the amount of aid China gave to North Korea over the same period, which totaled $1.9 billion.

The government and private businesses gave North Korea $1.84 billion through commercial trade, $544.23 million for package tours to the Mt. Kumgang resort, $450 million for an inter-Korean summit, $41.31 million in land use fees and wages for North Korean workers at the Kaesong Industrial Complex and $30.03 million as part of various social and cultural exchanges, according to internal documents of the Unification Ministry and other government agencies.

Funds to Develop Nuclear Weapons

“North Korea is believed to have spent $500-600 million to develop long-range missiles and $800-900 million to develop nuclear weapons,” a South Korean government source said. “And the cash provided by South Korea could have been used to develop them.”

Former government officials during the previous administrations deny this. Lee Jae-joung, a former unification minister, said in a lecture in July last year, “It’s frustrating to hear claims that North Korea conducted nuclear tests using money that the Kim Dae-jung and Roh Moo-hyun administrations gave. So far the government offered cash to North Korea only once.”

He claims that the government was not responsible for paying North Korea $450 million for the first inter-Korean summit in 2000 as that was provided by private businesses together with the cash for the Mt. Kumgang package tours and the Kaesong Industrial Complex.

However, the whereabouts of the cash payment of $400,000 Lee admits to is also uncertain. That was the money North Korea demanded in April 2007 to build a video-link center for the reunions of families separated by the Korean War. North Korea has yet to start construction. “I think they just extorted the money,” a South Korean government official said.

Hungry for Cash

“North Korea demanded money for every event,” said one Unification Ministry official who was in charge of humanitarian cooperation projects during the Roh administration. “We got the feeling that North Korea was trying to use the reunions of families separated by the Korean War as a means to make money.” The North even demanded that South Korea pay $1,000 for each video clip exchanged by families in addition to all of the filming and editing equipment as part of a project back in 2007 that would allow some separated families to stay in touch via video messages, the official said.

A National Assembly audit in 2006 revealed how North Korea made money off South Korean broadcasters. A key example is the W1 billion (US$1=W1,149) that state-run South Korean broadcaster KBS gave North Korea in 2003 to record a TV show about a singing contest in Pyongyang to mark Liberation Day.

In 2005, SBS gave W700 million in cash and W200 million worth of paint and other goods to North Korea for a concert in the North Korean capital by South Korean singer Cho Yong-pil, while in 2002, MBC paid the North W320 million in cash and provided 5,000 TV sets (worth W734 million) for two concerts in Pyongyang by South Korean singers Lee Mi-ja and Yoon Do-hyun.

North Korea also received sizable amounts from South Korean businesses and civic groups through unofficial channels or backroom deals. “Many business owners in the South had problems managing their companies because North Korea habitually made excessive demands for money,” said Cho Bong-hyun, a researcher at the Industrial Bank of Korea’s economic research center

This suggests that a considerable amount of bribes were paid. One South Korean owner of a garment company that was based in Pyongyang said, “Bribes South Korean businesses paid in the early stages to prevent any problems later became customary. After North Korean officials got a taste of the money, they ended up asking for bribes first.”

A Unification Ministry official said, “It’s impossible to estimate how much money was given to North Korea through unofficial channels. We can’t even trace the use of official government money given to North Korea, such as the $400,000 for building a video-link center for the family reunions, so there is no way of telling what happened to money handed over under the table.”

Read the full story here:
S.Korea Paid Astronomical Sums to N.Korea
Choson Ilbo
12/3/2010

Posted in Civil society, Finance, Fiscal & monetary policy, South Korea | 2 Comments »

Businesses in Kaesong Industrial Park struggling

Friday, December 3rd, 2010

According to Yonhap:

Once hailed as vanguards of reconciliation but now threatened by simmering animosity between the Koreas, a group of South Korean businessmen pleaded Thursday with senior lawmakers to safeguard their operations in North Korea against further political fallout.

Since North Korea mounted a deadly artillery attack on the South Korean island of Yeonpyeong on Nov. 23, these seasoned businessmen have had jitters over the fate of their factories built in the western North Korean border town of Kaesong.

Considered the last remaining symbol of reconciliation between the divided countries, the joint industrial complex houses more than 120 South Korean firms employing 44,000 North Korean workers.

Holding a commercial fair at the National Assembly, representatives from eight companies and officials from their association mingled with two dozen lawmakers and scrambled to tout their products as bearing the messages of hope and peace.

“We have achieved a level of quality that enables us to compete with any other industrial complexes in the world,” Bae Hae-dong, chief of the association of South Korean factories, said in a speech. “Yet, we remain easily affected by inter-Korean political circumstances. We especially deplore the situation that has arisen since North Korea attacked Yeonpyeong.”

The shelling of the small fishing community killed two marines and two civilians in the most indiscriminate attack on South Korean soil since the 1950-53 Korean War that ended in a truce.

A travel ban imposed on North Korea a day after the attack remains in place, allowing only a limited amount of raw materials to be sent to Kaesong and hamstringing manufacturing operations there.

“We are suffering a 10-15 percent decline in production due to the ban,” said Kim Ssang-kyu, general manager at Pyxis Inc., which produces jewelry cases and other accessories.

Sung Hyun-sang, president of Mansung Corp., which makes women’s clothing, claimed the damage in production amounts to as much as 50 percent.

“We understand the ban is for the sake of our safety, but we’re sure the North Koreans won’t hurt us. They know how important we are” to their cash-strapped economy, Sung said.

“We can only worry and pray for now,” an official at Shinwon, which produces men’s suits, said, asking not to be named because his remark could be taken sensitively.

About 410 South Koreans remained in Kaesong as of Thursday, a drop from 760 on Nov. 23 when the artillery exchange erupted between the Koreas, according to the Unification Ministry in Seoul.

The Kaesong complex produced its first articles — kitchen pans — in 2004 even though the two Koreas had agreed four years earlier on the project in an effort to lessen border tension.

Combining South Korean capital and know-how with the cheap labor in North Korea, the park recently reached a total of US$1 billion in production. Supporters of the estate say its significance goes far beyond economic benefits.

“Kaesong has been a safety pin whenever the security on the Korean Peninsula sagged to a dangerous level,” Kim Choong-whan, a legislator with the ruling conservative Grand National Party (GNP), said in a speech.

Park Joo-sun, who is with the liberal Democratic Party (DP) and sponsored the fair, expressed hope that the park will survive the crisis sparked by the North’s shelling.

The fair was scheduled before the crisis, organizers said. The lawmakers who attended it included Park Jie-won, a DP lawmaker who led the organization of the 2000 summit, and Lee Sang-deuk, President Lee Myung-bak’s older brother who is a GNP legislator.

“Sir, please help us,” Bae told the influential lawmaker touring the booths set up at the fair.

Gently embracing Lee with his arm in a show of friendship, another businessman smiled widely and whispered to Lee, “This is the lifeline of peace.”

In a brief interview on the sidelines, Lee downplayed the economic damage the South Korean firms said they have incurred since the travel ban on North Korea came into effect on Nov. 24.

“They should and can withstand this. It is a risk they were willing to take,” he said as he stepped onto the elevator taking him to his office inside the building.

Vice Unification Minister Um Jong-sik, who admitted in a speech that the companies were suffering drops in production, would not say how long the ban will stay in effect.

“All things and situations must be considered before we can make a decision,” he said after a long pause, when asked if South Korean artillery drills planned for next week in the Yellow Sea would prompt the ministry to extend the ban.

“For now, we’re doing our best to listen to these companies and address their needs as much as we can,” he said as he left the fair with two bags full of clothing he bought from Mansun Corp.

South Korea and the United States ended their four-day joint naval drills mobilizing an American aircraft carrier in the Yellow Sea on Wednesday, a move they believed would intimidate North Korea into calling off further acts of provocation.

The U.S. has 28,500 forces stationed in South Korea, a legacy of the Korean War in which it led U.N. forces to fight against North Korea. Since a U.S. commander drew a line separating the waters of the Koreas at the end of the war, the North has denied its validity, triggering a series of deadly naval clashes there with the South.

North Korea says any further artillery drills by the South on Yeonpyeong, less than 10 kilometers from the North Korean coast, are bound to violate its waters because the Northern Limit Line is null.

The communist state maintains that it fired at Yeonpyeong because it had been provoked by South Korean forces shooting artillery shells at its side across from Yeonpyeong.

Read the full story here:
Businessmen plead for help as tension threatens their factories in N. Korea
Yonhap
Sam Kim
12/2/2010

Posted in Foreign direct investment, International trade, Kaesong Industrial Complex (KIC), South Korea, Special Economic Zones (Established before 2013) | Comments Closed

DPRK bank transfers for nuclear program alarms EU

Thursday, December 2nd, 2010

According to Bloomberg:

North Korea’s use of international banks to facilitate nuclear weapons-related trade requires financial institutions to step up their vigilance, the European Union said.

North Korea exports $100 million in weapons and missiles each year in violation of United Nations sanctions, a UN panel wrote in a report released on Nov. 10. The EU said it’s concerned that some of the country’s trade involves prohibited nuclear technologies.

The 27-nation EU today urged all members of the International Atomic Energy Agency to “exercise particular vigilance over exports and financial transfers” in order “to prevent a contribution to proliferation-sensitive activities.”

Tensions with North Korea have increased in recent weeks. The country has built a new facility for extracting uranium, the key ingredient for nuclear weapons, a U.S. scientist reported on Nov. 20. Three days later, North Korea fired artillery at Yeonpyeong island, killing soldiers and civilians.

North Korea’s new nuclear facilities “could bolster its pursuit of a weapons capability and increases our concerns about prospects for onward proliferation of fissile material and of sensitive technologies to other parties,” U.S. Ambassador Glynn Davies said in a statement at IAEA’s meeting in Vienna.

The U.S. has been pressuring banks to cut ties with the North Korea’s regime, State Department documents posted today on WikiLeaks.org showed.

Reputation

Austria’s Financial Market Authority told the U.S. that it “exercised additional surveillance regarding North Korean financial activities” and that one bank cut ties with the country “to maintain its good reputation,” according to a February 2006 cable.

The U.S. and Japan will hold a week of naval drills beginning tomorrow. The aircraft carrier USS George Washington will join a force of about 400 aircraft and 60 warships. Drills will include responding to ballistic missile attacks on Pacific islands, the Joint Staff of the Japan Self-Defense Forces said in a statement.

“We will not accept North Korea as a nuclear-weapon state,” Davies said. “We seek an immediate halt of all nuclear activities in North Korea, including enrichment.”

Recent posts about the DPRK’s nuclear program can be found here.

Recent posts on Yonpyong can be found here.

Read the full story here:
North Korean Use of Bank Transfers for Atomic Work Alarms Europe
Bloomberg
Jennifer M. Freedman, Andrew Atkinson
12/2/2010

Posted in Banking, EU, Finance, Fiscal & monetary policy, Nuclear | Comments Closed

Dandong-DPRK trade and growth

Thursday, December 2nd, 2010

As the focal point of DPRK-PRC trade, Dandong has seen phenomenal growth in the last 5 years.

Here is just one area in southern Dandong:

Here is a separate area in northern Dandong where Yalu River high-rise development is underway:

And here is another island in the Yalu River:

Dandong has been the focus of increasing media attention over the last 10 years because it has economically benefitted from increased trade (and expected future trade) between the PRC and DPRK.

Today it is probably the easiest place to collect “survey data” on the DPRK’s business environment. According to a recent article in the Associated Press (via San Francisco Examiner), the DPRK still has a long way to go before foreign investors will see a climate ripe for investment:

Just across the Yalu River from North Korea, this sleepy border town in China’s Rust Belt is booming.

Towering apartment blocks are going up on the city’s western edge near the new Friendship Road Bridge, which will soon be the second bridge connecting Dandong to the North Korean city of Sinuiju.

Offices for trade and export-import companies dot the main road along the riverfront. A new airport is being built. Shops sell North Korean liquor, blueberry wine, ginseng, stamps and music CDs. And North Korean restaurants offer popular Korean dishes such as stewed dog leg and spicy deep-fried dog.

Dandong – like other parts of northeastern China along the 870-mile border – aims to profit from China and North Korea’s growing cross-border trade, now close to $3 billion a year. At a time when the United States and its allies are looking to isolate the Pyongyang regime for its nuclear program and erratic behavior, including this week’s artillery attack on a South Korean island, this hardscrabble part of China is finding that being North Korea’s back door to the world can be a lucrative business.

China already provides an estimated 90 percent of North Korea’s energy needs and most of its food and weapons. And the most recent gauge of trade between the two countries, from 2008, showed an increase of more than 40 percent from the previous year, according to the Council on Foreign Relations.

But even as officials map out grand plans for more cooperation, merchants and small-scale traders say doing business with North Korea remains problematic at best.

The government is unpredictable, they say, and rules change without warning. They tell horror stories about Chinese traders who have lost millions of dollars in goods or equipment that is expropriated or stolen outright. Many now insist on cash-up-front transactions and mostly conduct business on the Chinese side of the border, where they say they have more protections.

Moreover, while North Korean leaders have visited this part of China and professed admiration for China’s economic boom, local Chinese traders and businessmen in close contact with North Koreans say they don’t expect the country to shift to a market economy anytime soon.

“I haven’t seen any sign the North Korean government wants to open up,” said Cui Weitao, 47, who has been trading fruit, clothing, plastic bowls and chopsticks to North Korea for the past decade. “If they really wanted, they could learn from China and Russia. If they wanted, they could let people go back and forth and trade freely. . . . If they opened the border, their whole country would benefit.”

His friend, Wang Tiansheng, 47, another small-scale trader, agreed. “The thought of economic reform has been there for years but never happens. Not while the father is alive,” he said, referring to the country’s leader, Kim Jong Il. “Maybe when the son takes office.”

China and North Korea have been close allies since Chinese troops crossed the Yalu River to help North Korea fight American and South Korean troops during the Korean War, which is referred to here as the “War to Resist U.S. Aggression and Aid Korea.”

Yet Chinese leaders themselves consider North Korea’s leader an often-troublesome ally because of his brinkmanship with the United States over his country’s nuclear capability and incidents such as this week’s artillery barrage of Yeonpyeong Island, which killed two South Korean marines and two civilians, and the sinking of a South Korean warship in March.

Chinese leaders are reported to be concerned about North Korea’s economic crisis, and they encouraged Kim to embrace market-based economic reforms when he visited China in May and August this year and met with Chinese President Hu Jintao, according to some Hong Kong and South Korean media reports of the visits.

In a bow to reforms, North Korea sent a dozen mayors and provincial chiefs to northeastern China in October to visit factories and chemical plants. Earlier this month, North Korean Premier Choe Yong Rim visited Harbin, in Heilongjiang province, to discuss joint economic projects.

North Korea agreed to lease two Yalu River islands to China to develop into “free trade zones.” Chinese high-tech companies were encouraged to signed agreements to hire North Korean computer experts. In September, after Kim’s second visit, China established a new 100,000-square-foot marketplace in Tumen – across from Namyang in North Korea – for North Koreans to come on one-day passes to sell or trade their goods.

But the Tumen market in many ways illustrates the difficulties of coaxing North Korea to open up. The vast market is now mostly empty because the North Korean government changed its mind about allowing its citizens to come to China to trade freely, Tumen residents said.

One of the few Chinese vendors in the market during a recent visit, who was selling North Korean crab, shrimp and frozen fish, said he lost a lot of money because his North Korean supplier increased prices without warning.

“It’s been really hard and risky to do business with North Korea, firstly because of the complicated procedures of going there,” the seafood vendor said, speaking on the condition of anonymity. He said Chinese traders need an invitation from a state-owned company and three stamps from three departments.

Once inside North Korea, he said, officials “are very greedy. They asked us for digital cameras or DVD players or even computers. We have to buy them dinner, and booze is a must for every time we meet.”

Even the new Friendship Road Bridge being constructed – to augment the existing single-lane bridge – has been difficult to negotiate. China agreed to foot the bill for building the bridge, more than $200 million. But then North Korea demanded China also build a five-star hotel and other infrastructure on the North Korean side, local businessmen said.

Economists said the experience of the local traders confirms their own research: that while North Korean officials publicly claim to want to pursue economic reform, and may speak of emulating China’s success, North Korea’s ruling elite remains deeply ambivalent about anything that might dilute its grip.

“The state has never been comfortable with the market,” said Marcus Noland, senior researcher with the Peterson Institute for International Economics in Washington, who surveyed 300 Chinese companies operating in North Korea. “They see the market potentially as an alternative path to wealth and prestige, and perhaps political power.”

While trying to “deepen their economic integration with China” at the official level, Noland said, North Korean leaders at the same time take steps “to eradicate this kind of normal trading activity at the border” by denying visas and constantly changing the regulations.

“The Chinese do not trust the North Koreans at all,” Noland said.

According to a recent story in the Wall Street Journal, the second DPRK-PRC bridge in Dandong is still tentative:

Construction of the new bridge was originally slated to start in August. Zhao Liansheng, Dandong’s mayor, said in March that building would start in October, and be finished within three years.

“The new bridge is still waiting for the approval of central government,” said an official from the Dandong Transportation Department. “As far as I know, this project is not definite yet.”

I am not sure of the exact location of the new bridge. If any readers are aware, please let me know.

Read the full stories here:
In Chinese Border Town, Trade With North Korea Can Be Lucrative but Problematic (Dandong, China).
Associated Press (via San Francisco Examiner)
Keith B. Richburg
11/26/2010

Border Bridge Reflects Dilemma
Wall Street Journal
Jeremy Page
11/28/2010

Posted in China, Foreign direct investment, Google Earth, International Governments, International trade, Statistics, Trade Statistics | Comments Closed

DPRK Wikileaks story index

Monday, November 29th, 2010

Below I am indexing media coverage of Wikileaks stories involving the DPRK:

2011-10-7: Jordanian bank tied to illicit weapons trade.

2011-9-13: As ties between the DPRK and Myanmar continue to grow, it is becoming more difficult for defectors to transit to South Korea.

2011-9-11: The Guangdong Development Bank, a mainland lender partly owned by the U.S. bank Citigroup, had banking ties with a North Korean arms dealer in 2009, according to a cable sent by the U.S. Consulate General in Hong Kong in July 2009, The South China Morning Post reported Saturday, quoting information provided by the Wikileaks.

2011-9-8: Hyundai Group Chairwoman Hyun Jeong-eun said Kim Jong-il believes the 2004 train station explosion in Ryongchon assassination attempt.

2011-9-6: U.S. prepared to intercept N. Korean missile: cable

2011-9-5: North Korean leader Kim Jong-Il expressed distrust of his country’s major economic prop China during a 2009 meeting with a visiting South Korean businesswoman, according to a US diplomatic cable.

2011-9-5: Myanmar, North Korea traded rice for arms: US cable

2011-9-3: Sudan negotiating purchase of missiles from North Korea

2011-9-3: US State Department urged China not to sell steel to the DPRK.

2011-8-3: Cambodian government worked with US and South Korea to quietly process North Korean defectors

2011-6-1: US tried to get Canada to finance oil donations to DPRK.

2011-4-11: China and US held DPRK intelligence talks.

2011-1-18: Did Iran pay the DPRK through a South Kroean branch? The bank says no.

2011-1-6: U.S. Ambassador Feels Heat from WikiLeaks

2011-1-5: Chinese criticize DPRK currency reform.

2011-1-4: Kim Jong-il told a visiting South Korean businesswoman in 2009 that he had ordered the removal of a missile launch scene fromthe Ariarang Mass games because “Americans did not like it.”

2011-1-4: Former Chinese ambassador to Seoul, said today’s North Korea was similar to China during the Cultural Revolution in the 1960s and 70s and dealing with officials there required that he “mentally reset his personal clock by thirty years.”

2010-12-19: WikiLeaks cable: Winston Peters condemns N Korea missile tests