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Reflections on Kedo

Thursday, June 1st, 2006

Joong Ang Daily
6/1/2007

The Korean Peninsula Energy Development Organization, or KEDO, announced yesterday that the project to build light water reactors at Sinpo, North Korea, has been scrapped. The infiltration of a North Korean submarine into Gangneung, South Korea, in 1996 and the firing of a Daepodong missile in 1998 were all incidents that cast a shadow on the project. In particular, the admission in 2002 by North Korea that it was working on a nuclear program using enriched uranium was the final straw in the Bush administration’s decision to halt a project that it was already skeptical about. In response, the North withdrew from the Nuclear Proliferation Treaty in 2003 and went on to declare in 2005 that it possessed nuclear weapons. Such developments led to today’s situation.

The confrontation between North Korea and the United States does give us something to think about. While agreeing with us on the denuclearization of the Korean Peninsula, the North secretly hung on to developing nuclear weapons. In response, in 1994, we cooperated with the United States but were not even allowed into the negotiations yet we still agreed to cover 70 percent of the cost of the light water reactor project. That may have been inevitable, because South Korea was the country most threatened. Nevertheless, it is debatable whether the negotiations in which Seoul paid the bills but had no say in the matter were the best method. This is an issue that the government needs to ponder seriously.

It has also become clear that the changes in U.S. foreign policy with a new administration are too much for us to deal with. Even though we threw away $1.1 billion, a solution to the North Korean nuclear problem seems to be even further away, Washington continues to cling stubbornly to its new policies.

So the administration should think about what it has learned from this experience and how it should use that knowledge. One good example is the announcement by Seoul last year that it would provide 2 million kilowatts of electricity to the North even before figuring out what the North’s answer would be.

The announcement was billed as an “important proposal,” but the North has turned a blind eye to it and says it wants a light water reactor. With an astronomical amount of tax money already having disappeared, isn’t offering to provide electricity to the North another burden? Whether it’s North Korea or the United States, others have an ability to think strategically and look into their opponents’ minds. Why not us?

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Posted in Foreign direct investment, International trade, KEDO, Nuclear, South Korea | Comments Closed

‘Yellow Spring’ in North Korea…Similiar To The Food Shortage in 1998

Sunday, May 28th, 2006

Daily NK
Kim Young Jin
5/28/2006

North Korea is facing the hardest “yellow spring” right now. ‘Yellow Spring’ means the hardest time of the year in North Korea. “Yellow spring” originates from how the sky looks yellow because of starvation.

Mr. Lee Hyun Soo (46) who crossed the Tumen River on 15 May said, “It is hard to endure day by day”.

Mr. Lee, head of a household of four said, “Rumors of people going to China and South Korea go around. I tried not to cross the border, but I did because of my family members who are starving”. He complained, “The government have been acting like they would give us food for a long time, but they deceived us”.

Recently, North Koreans who cannot make their ends meet like Mr. Lee started to cross the Tumen River again. The reporter met 5 North Koreans including Mr. Lee. They met with the reporter at a secret place in Yanji, and expressed strong discontents about the situation of food shortage in North Korea and the policy regarding food distribution system.

Mr. Choi Young Nam (37) said, “I have been waiting since the 1st of April. I know that there are even less rice in spring, so where would the rice come from? They cannot deceive us like this”. Mr. Choi said. “In January and February, rice for 2~3 days were given to the old and supporting families. After that, we bought the rice at Jangmadang price at the distribution center”.

The official price of rice is 45won($0.015) for rice and 25won($0.0083) for corn. After North Korea resumed its food distribution system, the government regulated the rice transaction at Jangmadang while selling rice at 950 won($0.32) and corn at 350 won($0.12), which is same as Jangmadang price. Recently, price at Jangmadang went over 1300 won($0.433) and the price at distribution center went up accordingly.
“Similar To The Situation At The End Of Food Shortage In 1998”

They say, “Family of those who work at the government, police and national security agency store up food for one year. People who work at powerful organizations such as Office #5 (foreign currency earning office under office #39 under the Party, loocated at each city and province) receive food, but other workplaces do not distribute food anymore”.

After the 7.1 Economic Management Improvement Measure in 2002, policy which orders each organization to provide for their workers has been adopted; workplaces with power can feed the workers, while poor factories cannot. People generally have an attitude that does not care if others can eat or not.

Mr. Park who was involved in ‘suitcase business’ with Chinese said, “Everyone is involved in trade, and I could not even break even because I could not sell the goods at fair price”.

Mr. Park who is employed at a steel factory in Hoeryong has three family members to support. Mr. Park crossed theTumen River to earn money by farming in China, because it seemed hopeless and difficult to live in North Korea. Following is what Mr. Park said.

“The situation is similar to the situation at the end of food shortage in 1998. The number of people who come to China will increase soon. People at the border area know that why they are so poor because they are involved in trade with Chineses. All they have in their heart is anger”.

“Living By Grassroots and Porridge, The Old and The Sick Are Dying Of Starvation”

Mr. Hyun Joo Hoon (50) who sold goods in Pyongan and Hwanghae Province says, “People in Pyongan Province are worse off than those in border area”.

People in Pyongan Province and at border area both do not receive food from distribution system, but people in provinces without the capital to start business began to eat grassroots and porridge for meals. Mr. Hyun said, “I ate corn porridge because I only received five day worth of food”. Mr. Hyun said, he had seen the sick and the old dying of starvation at Soonchun and Dukchun in South Pyongan Province.

Mr. Hyun said, “It is because the government regulated the outflow of food to other provinces as the government ordered the regional governments to distribute food on their own”. In the fall of last year, North Korean government has regulated the outflow of food by placing posts at highways connecting different cities and districts.

Mr. Lee added, “People in the inner provinces believe the propaganda of the North Korean government that the reason for the poverty is the economic sanction by imperialists, even when they are dying. Unless their thoughts change, they cannot even resist”.

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Posted in Agriculture, Black markets, China, Economic reform, Emigration, General markets (FMR: Farmers Market), Price liberalization | Comments Closed

In Deep South, North Koreans Find a Hot Market

Thursday, May 25th, 2006

New York Times
NORIMITSU ONISHI
5/25/2006

TAEJON, South Korea — At the Pyongyang Moran Bar on a recent Friday evening, a large video screen showed uplifting images of rocky mountains and an open blue sky. A slogan appeared at the bottom: “Kim Jong Il, a man who comes along only once in a thousand years.”

The North Korean waitresses wore traditional dresses in the bright colors that were fashionable in the South some years back. The singer’s interpretation of “Whistle,” a North Korean standard of the 1980’s, was shaky and off-key. Service was bad and included at least one mild threat. Drinks were spilled, beer bottles left unopened and unpoured.

But the South Korean customers could not get enough of the Pyongyang Moran Bar.

“Encore!” cried Bae Seong Wan, 44, at the end of “Whistle.”

The Pyongyang Moran Bar is located, not north of the demilitarized zone, but here in downtown Taejon, a city in the South Korean heartland.

The 120-seat bar opened in February, complete with inferior North Korean beverages, North Korean landscape posters, North Korean songs, a photo of Mr. Kim above the bar counter with his South Korean counterpart and, most important, North Korean waitresses — or, as a sign outside announced, “beautiful girls from North Korea!”

Until the 1990’s, South Korean schoolchildren were awarded prizes for drawing posters depicting diabolical North Koreans. Then the South’s so-called sunshine policy of engagement transformed North Koreans into real human beings in the minds of South Koreans and in popular movies like “Joint Security Area.”

Now, after more than half a decade of rapprochement, the North is all the rage, in a retro-kitschy fashion, and North Koreans are seen not as threatening aggressors but as country bumpkin cousins, needing an introduction to big-city life.

North Korean defectors and South Koreans alike are opening North Korean-themed restaurants, selling North Korean goods and auctioning off North Korean artwork on www.NKMall.com.

Half a century of division has turned the South into the world’s most wired society, as its consumer products and pop culture increasingly shape the tastes of youth across Asia.

North Korea, meanwhile, has remained frozen in time, a repository — at least to someone with a sharp nose for marketing — of an unchanged Korea.

“North Korea is retro,” said Jong Su Ban, 42, a North Korean defector who plans to open a North Korean restaurant, Ok Ru Ok, in Seoul soon. “It reminds South Koreans of the 1950’s and 1960’s, before South Korea industrialized. They see handmade crafts that are not sophisticated, and they think, ‘It’s like us before we developed.’ ”

The timing was right, Mr. Jong said, pointing out that only a few years ago a restaurant in Seoul with a waiter dressed as a North Korean soldier went belly up fast. “He made people uncomfortable,” he said.

At a company called NK Food, Hong Chang Ryo, 45, a South Korean who opened two North Korean restaurants in Seoul this year and is planning to open a third here, agreed.

“Even two or three years ago,” he said, “we couldn’t have done this. We would have been fingered as commies.”

Mr. Hong’s first restaurant, Nalrae, Nalrae — or fast, fast in the North Korean dialect — “invites you to a different taste” with more than 27 dishes named after places in the North. Shelves stocked with mushrooms, alcoholic beverages, seaweed — “straight from Pyongyang” — are the main attractions in the restaurant, which is painted organic green. A menu promises “nonpolluted, well-being dishes using natural resources from North Korea.”

“It feels rural, natural, unpolluted,” said one first-time customer, Lee Sae Mie, 23, a university student.

While about 40 percent of the dishes’ ingredients come from the North, Mr. Hong said, the flavors had to be adjusted, considerably, to appeal to South Korean palates.

“We had to rack our brains,” Mr. Hong said. “We all know they just eat cornmeal over there. Well, we just don’t know what they’re eating over there. So we mixed and matched. Dishes may look North Korean but actually taste South Korean.”

Increasingly, though, people are parting with South Korean won to buy goods from www.NKMall.com, which Park Young Bok, a South Korean, set up in 2003. The site sells mostly food products, which shoppers can also buy at 70 stores nationwide.

Last September, Mr. Park added an auction for North Korean paintings, which have been selling briskly, reaching $115,000 in sales in April. With South Korean officials still banning artwork with political content, most of the imports are of landscapes — though, oddly, a tapestry of the Virgin Mary was auctioned off recently for $80.

At his warehouse just outside Seoul, Mr. Park showed off some of the 30 North Korean alcoholic beverages he sells — some of them with labels slapped crookedly on the bottles, others with the contents partly evaporated because of poor bottling.

But to hear some of the patrons at the Pyongyang Moran Bar here tell it, leaking bottles, even bad service, are part of the North Korean appeal.

“I don’t know how to open this,” said one waitress struggling with a bottle of Budweiser. The waitress — who had worked at the bar for only two days and who, like many North Koreans, had never opened a bottle before — tried to get the top off, then handed the bottle to the customer, who opened it himself.

Another customer, Kim Chung Sig, 39, said, “I don’t expect the service to be good here.”

Choi Jung Hee, 37, the manager, said she had trouble training her North Korean staff of five waitresses. “At least, they should say, ‘Hello!’ properly when customers come in, but they don’t,” she said.

“Things are very different in North Korea,” she said. “Over there, waitresses and salespeople are kings because they have access to goods. But here you have to treat customers like kings. You have to bow to them and be polite even if they are rude.”

Reaction to the bar is decidedly split, an indication, said Mr. Jong, the North Korean who is opening up Ok Ru Ok, that South Koreans see in North Korea what they want to see.

Older South Koreans, who still look upon the North as an enemy, want to see images of starving North Korean babies, Mr. Jong said. Younger people, who often want friendly relations with the North, want to see the clean streets of Pyongyang.

“Both sides want to satisfy their beliefs,” Mr. Jong said, standing inside his soon-to-open restaurant. “That’s why I’ll put up only neutral images of North Korea in my new restaurant.”

Everything has fallen into place now for Mr. Jong, who came to South Korea in 2000 and earned a living writing pornography before plunging into food. He has even secured a supply of the North’s coveted Taedong River beer.

“When I lived in North Korea,” Mr. Jong said, “I never knew that this beer even existed. I’ll have North Korean beer for the first time in South Korea. I lived in a very funny country.”

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Posted in International trade, Restaurants, South Korea | Comments Closed

Moody’s pessimistic on DPRK reform

Wednesday, May 24th, 2006

Will this have repercussions in the south’s credit rating?

From the Daily NK:

On May 22, an official of Moody’s Investor Service, a Credit Rating Agency, announced that despite Kim Jong Il’s visit to China early this year, North Korea did not show indications for internal economic reformation.

On May 22, Vice-president Thomas Byrne of Moody’s Investor Service rated the possibility of North Korea towards economic reformation negative in the North Korean Economic Outlook Symposium held by Institute for Corean-American Studies(ICAS) in the Rusell Senate Building.

Vice-president Byrne estimated that North Korea failed to adjust its currency and exchange rate, and its trade environment was not improved, so that rather its economic situation was worse. Plus, he emphasized that North Korea did not show any signs of internal economic reformation.

He said about Gaesung Industrial Complex that, “If 5 more complexes like Gaesung Industrial Complex develop, we can see North Korea be in the economic reformation’s process, yet the Complex is no more than a symbol”. He emphasized that if North Korea has a strong resolute for economic reformation, “it should follow the economic model of South Korea because the way to Seoul is easier than the train to Shanghai for it”.

Vice-president Byrne warned that if South Korea would continue to support North Korea economically, it would face economic crisis soon.

While saying that, “The difference between the approaches of South Korea and the U.S is not great enough to make an impact on the credit rating of South Korea”, he stated, “Due to North Korea, South Korea always gets a lower credit rating than its original rating”.

Meanwhile, a special correspondent informed that North Korean-Chinese trader Lee Dae Kil(pseudonym, 49) who recently came back from North Korea showed a negative opinion about North Korean economy.

Mr. Lee said that, “There has been little profit in spite of trades with North Koreans for a few years”, and “North Koreans buy and sell only for living, not for investment for profits. He said that, “The North Korean government does not show even such efforts”,.

Mr. Lee said that, “After it was known that the U.S blocked banks banking with North Korea, dollar transactions sharply decreased”, and “There were people who even asked me about what happened outside”.

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Posted in Banking, China, Economic reform, Fiscal & monetary policy, Foreign direct investment, International trade, Price liberalization, South Korea, Special Economic Zones (Established before 2013), USA | Comments Closed

Seoul may face fiscal challenge to future DPRK aid

Tuesday, May 23rd, 2006

From Yonhap:

By Lee Dong-min
WASHINGTON, May 22 (Yonhap) — South Korea is fiscally able to handle its economic aid to North Korea, but the situation may change in the future when it will be required to spend more on its social welfare system, a senior official at Moody’s suggested Monday.

Speaking at a symposium by the Institute for Corean-American Studies (ICAS), Thomas Byrne, vice president of the international credit rating agency, said he does agree that North Korea is headed to meaningful economic reforms.

South Korea is one of three nations whose geopolitical risks are considered in judging its credit rating. Israel and Taiwan are the others.

Divided since the end of the three-year Korean War in 1953, the Korean Peninsula remains tense and volatile as Pyongyang seeks nuclear weapons it claims it needs as a deterrent against possible U.S. attack.

According to Byrne, the situation keeps South Korea one notch below the credit rating it normally deserves.

In trying to ease the tension, Seoul has been trying to engage Pyongyang by providing food and other types of economic assistance. A recent project involves an industrial complex in the North Korean border city of Kaesong where South Korea’s smaller firms have built manufacturing plants to use North Korea’s cheap labor force to make their products more price-competitive.

Byrne said Moody’s assesses the fiscal implications of South Korea helping to keep North Korea’s debilitated economy afloat.

“In fact, the North Korean economy is more unstable now,” he said, citing hyperinflation, backfired currency reform efforts and minuscule international trade hovering at US$3 billion a year.

Seoul, along with Beijing, is a major donor to Pyongyang, but it may be pressured to think otherwise, according to the Moody’s official.

With its aging society and expected large expenditures in social welfare and health care, South Korea will need a larger domestic budget, he said.

“Domestic social welfare demands would compete with sunshine/co-prosperity policy if the latter continues to increase, or increase sharply in the future,” said Byrne.

Despite North Korean leader Kim Jong-il’s visits to China that many saw as his study of Beijing’s economic reform path, the Moody’s official didn’t see any significant signs.

“I don’t see any internally generated reform process,” he said. “North Koreans aren’t anywhere near the positions of embarking on policies of China… or Vietnam.”

Kaesong is, at least for now, more important for South Korea than North Korea and not enough to show that Pyongyang is changing, he said, “If there were five other Kaesongs in North Korea, then it may mean something to North Korea… then, maybe North Korea is changing,” Byrne said.

The tension over North Korea’s nuclear problem intensified with U.S. accusations that Pyongyang was counterfeiting American currency and dealing in contraband.

In September, the U.S. Treasury designated Macau’s Banco Delta Asia (BDA) a primary money laundering entity working for North Korea, saying the bank was abetting Pyongyang’s illicit financial activities.

Daniel Glaser, deputy assistant secretary of treasury, said there is “very little question” that North Korea was involved in counterfeiting U.S. dollars, mostly $100 notes commonly called “supernotes.”

“Every seizure of these notes has been linked to each other… all of them have involved distribution by North Korean diplomats,” he told the ICAS symposium.

He again denied that the action against BDA was in any way meant to affect the nuclear negotiations with North Korea.

“This is a new approach to U.S. national security,” Glaser said, emphasizing that it was under new laws and newly created offices that steps like those against BDA were coordinated.

Wendy Cutler, assistant U.S. trade representative, focused on upcoming free trade agreement (FTA) negotiations with South Korea that she hopes will have far-reaching effects beyond the two nations.

“This agreement will help underscore U.S. commitment to engage the Asian region … the U.S. is committed to developing robust trade relationships in Asia,” she told the symposium.

Seoul and Washington will hold their first formal FTA talks next month in Washington and hope to come up with a final draft by end of this year.

Cutler, who heads the U.S. side in the negotiations, noted that FTAs require political decisions that defy strong domestic opposition.

FTA opponents in South Korea plan to come to Washington to protest the launch of the negotiations, alarming law enforcement officials of both countries.

Cutler said despite press reports of such opposition, polls indicate general support.

“It’s important to know that the Roh (Moo-hyun) administration and the majority of the Korean population and business community support the FTA,” she said.

A U.S. trade official, reacting to reports of protesters coming to Washington, cited the same polls.

“You need to keep in mind that based on polls in Korea, overall sentiment in Korea is strong support for the FTA,” the official said.

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Posted in Foreign direct investment, Illicit activities, International trade, Kaesong Industrial Complex (KIC), South Korea | Comments Closed

9th Pyongyang International Trade Fair news (5/2006)

Friday, May 19th, 2006

PYONGYANG ― In a rare visit to this reclusive communist country, a group of South Korean government officials, journalists, businessmen and economic experts attended a series of investment promotion events arranged this week by the North Korean government.

At a trade fair, South Koreans toured bustling booths set up by North Korean and foreign firms, and witnessed North Koreans buying goods there with U.S. dollars in their hands ― an indication that Pyongyang’s limited foray into capitalism, which began in 2002, is slowly progressing in the North’s strictly controlled economy.

The delegates on Wednesday visited the 9th Pyongyang International Trade Fair, where 196 companies from 12 countries set up booths. The delegates were allowed to look around the fair freely. Of the participating firms, 21 were from North Korea and the rest came from 12 other countries, including China, Russia, Spain, Sweden, Syria, Italy and Thailand.

At the fair, Jeil Trust Bank, a North Korean bank, advertised its savings account programs for foreign currency deposits. Cars, bicycles, tires and machinery made in the North were also displayed.

About 1,000 Pyongyang residents and North Korean businessmen also attended the fair, and most flocked around the sales booths of Chinese appliances. Some North Koreans purchased handbags, pots and other goods, making payments with dollars.

The 72-member delegation also visited a glass manufacturing facility southwest of Pyongyang on Wednesday. Daean glass factory, completed in October, was built with a $20 million investment from China. About 30 Chinese technicians are also training North Korean workers at the plant.

“In early 2000, North Korea decided to shut down all its glass factories, and decided to build a new plant,” Pak Jong-ung, deputy manager of the plant, said. “China learned about the plant and invested in it.”

The South Koreans also toured a ship repair plant in Nampo, South Pyeongan province. At the Yongnam factory, Cha Son-mo, senior North Korean maritime affairs official, gave a presentation. “Last year, we finished the second dock, capable of repairing a 50,000-ton ship,” Mr. Cha said. “Please use our facility to promote inter-Korean economic exchange.”

Jeong Nam-su, senior planning manager of STX Corporation, a South Korean ship maintenance firm, said the facility was better equipped than he expected. “It is also surprisingly modernized,” Mr. Jeong said. “I am considering asking the North Korean factory to repair one or two ships after I return to the South.”

On Tuesday, the group attended an investor-relations session hosted by the North’s Trade Ministry, with simultaneous translations into Chinese and English available. About 70 foreign investors attended. It is the first time South Koreans were invited to such an event. Rim Tae-dok, the trade ministry’s councilor, gave the presentation, promising tax benefits and land leases at low prices.

The delegation visited Kim Chaek University of Technology and Kim Il Sung University and toured Mount Myohyang. The group, which began its trip on Monday, will return to Seoul Saturday.

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Chinese-DPRK border update

Thursday, May 18th, 2006

Froom the Daily NK: 
5/18/2006

Approximately one million crossed the DPRK/PRC border back and forth during the food shortage. Today, the border area is where most recent, accurate information about North Korea can be obtained.

China stationed soldiers from Shunyang military district to the North Korea-China border three years ago. The border line of North Korea including Yalu River and Tumen River is 1,376.5 km. North Korea-China border is 1,360km, and North Korea-Russia border line is 16.5km.

North Korea has 100-110 thousand strong ground forces on the border area in order to control the inflow of information from outside and the illegal smuggling and border transgression of North Korean defectors. It means that each soldier guards 14m.
Ground Forces on the border increased rapidly after the treaty of friendship between China and South Korea

The reinforcement of the border in the 1990s has much to do with the change in international politics including the demise of the Cold War the growth of friendship between China and South Korea. Until the early 1990s when North Korea sustained the “blood alliance” with USSR and China, North Korea only focused on increasing the military power on north of the 38ty parallel.

Kim Jong Il said in regards to the treaty of friendship between South Korea and China, “38th parallel is outpost for the military power, while the [chinese] border is outpost for the ideology”. North Korea reorganized the military to reinforce the border control.

In 1992, the Department of Military Mobilization in various parts of North Korea recruited high school and middle school students, office workers and farmers to organize the border control.

In 1992, the responsibility for border control and coastal defense was delegated from National Security Agency to Border Control Command under Ministry of People’s Armed Forces. The Coast Guard was assigned under military base under Ministry of People’s Armed Forces in each district. Border Control Command was located in Ganggye, Jagang Province, but was moved to Pyongyang in 2002.
The Military Force of the Border Control

A North Korea defector Heo Yong Sun (43) who used to be a border guard says there are 4 Brigades, including Division 10 (located at Baeksa dong) in ShinEuiJoo, Brigade 32 in Chongjin, Brigade 37 in Jagang Province, Brigade 44 in Yanggang Province. Division 10 at ShinEuijoo has 14 battalions, which is qualified for division.

Mr. Heo says the border control brigades have 11 battalions on average. One brigade operates 4,000-5,000 soldiers and one battalion has 350 soldiers. There are 3 companies of 100 soldiers under battalions, and companies cover platoons and guard posts of 30 soldiers.

Mr. Lee Chul Young (34) who used to be a commander of a military district of Border Control and entered South Korea in 2004 says, “There are cavalry brigade and tank brigade under the Border Control Command, and the military force amounts to over 10~30 thousand soldiers. Companies have 250~300 soldiers and one battalion has more than 1,000 soldiers, which shows that the scale of military force is different from other People’s Armed Forces.

The smallest unit of Border Control is a platoon. One platoon is in charge of 3km, and one platoon has 12 guard posts. Guard posts have round of inspections during the day, and at nights, 2~3 soldiers are on a stakeout. They are on guard in three shifts a day.

For night time guards, 3~4 soldiers are mobilized including the commander of the platoon, and one agent from National Security Agency is included. A post for the stakeout is a half-underground cave where the soldiers can have a 120 degree view on China.

Border guards are equipped with AK Automatic Rifle-58 and 68. A commander and high level soldiers are equipped with cartridge and low level soldiers are supplied with blank cartridge. On the border, gunfire is preferably restricted, and when someone wanted by the National Security Agency intrudes the border line, gunfire is allowed.

One advisor from National Security Agency was assigned for each platoon since 1999. However, the advisors encouraged illegal border transgressions with bribery, which caused the Ministry of People’s Armed Forces to assign one advisor at each company since May 2002.

Border guards aim to “Earn Three Hundred Thousand Won” causing costs to rise for transgressions.

The biggest wish for the border guards is to make money while in the military. They are on the lookout for border transgressors rather than protecting the border from intrusion of spies. Until 1990s, the soldiers tried to “earn thirty thousand Won”, but it changed to three hundred thousand won because the currency depreciated.

Border Control Command shifts around the border guards at Pyongan, Yanggang and Hamkyung Province every two years in order to prevent frequent corruption of the soldiers. It is understood that two years is enough time for the soldiers to get down to cooperating with the locals to receive briberies.

Mr. Lee Chul Young said, “On fortunate days, it is possible to earn couple hundred thousand won. Commanders are involved in smuggling through Foreign Currency Earning Organizations, and lower officials make small money through controlling the border transgressors”.

The cost for border transgression rose after the order to control the border. In 2004, the transgressions cost 300 Yuan($40), but it rose to 500 Yuan ($65) and to 800 Yuan ($120) now.

North Korean defectors who crossed the Tumen River recently said, “You have to pay 500~1,000 Yuan for lower officials and more than 1,000 Yuan for the Commanders (Generals)”.

Transgression in the winter is the cheapest. However, around March when the ice melts on the river, the border guards have to go through the difficulty of wearing rubber pants and helping the transgressors cross the river, which costs more than 1,000 Yuan.

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Some Kaesong goods considered “South Korean”

Wednesday, May 17th, 2006

From the Donga:

On May 16, Korea and the Association of Southeast Asian Nations (ASEAN) reached an agreement on the modality for freeing their goods, a core part of a free trade agreement (FTA). Under the agreement, the goods produced in North Korea’s Gaesong industrial complex will be recognized as Korean if the products meet certain terms.

The Office of the Minister for Trade announced that Trade Minister Kim Hyun-jong and trade ministers from nine ASEAN members signed an agreement on FTA goods trade on this day in Manila, the Philippines, leaving out Thailand for the time being.

The Korean government plans to ask the National Assembly to ratify the agreement in the regular session in September so that it can take effect within this year.

Only 100 items out of the products made in Gaesong industrial complex will be recognized as “Made in Korea,” as long as more than 60 percent of the materials from which they are made are of South Korean origin or if the added value of South Korean materials put in the product is more than 40 percent.

Kim Han-soo, FTA bureau chief, said, “If needed, Korea can make a request for a change in the items recognized as Korean made.”

According to the agreement, Korea and ASEAN are bound to remove tariffs on 90 percent of the number of import items and of the import amount respectively by 2010.

Tariffs on “sensitive items” including squid, mushroom, and pumpkin will be lowered to 0 ~ 5 percent by 2016. “Highly sensitive items” will be excluded from the market opening and be protected by means of a limited level of tariff cut by 2016 or a tariff rate quota.

Forty-five items such as rice, chicken meat, live or frozen fish, and most fruits are protected from the opening.

The Office of Minister for Trade said, “This is the first FTA which Korea signed with the fifth largest export market.” And it also predicted, “In the mid to long term, the FTA with ASEAN is expected to increase Korean exports to the ASEAN region by $10 billion and trade surplus by about $6 billion annually.”

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Computing facilities and cable drawing upgraded

Wednesday, May 17th, 2006

A group of 72 South Korean businessmen, government officials, academics and journalists toured a manufacturing company in the capital of communist North Korea yesterday, the second day of their visit. The delegates also visited the Korea Computer Center and the Grand People’s Study Hall ― the country’s central library ― and attended an investment promotion session conducted by the North’s Trade Ministry.

During their visit to the Pyongyang March 26 Cable Factory, the group surveyed production lines and automated manufacturing facilities as well as finished products. They were allowed to speak to the factory managers, who oversee 1,500 workers producing 10,000 cable products. With $2 million investment from pro-Pyongyang Koreans overseas, the factory upgraded its facilities recently.

“We hope to adopt the more advanced technology of the South in the future,” Kim Seok-nam, head manager of the plant, said. “I want to nurture this factory, one of the most representative plants in Pyongyang, as a global manufacturer.”

Mr. Kim said the factory is operated 24 hours a day in three shifts. “We purchased a Swedish wire drawing machine recently and that reduced our electricity consumption and increased production.”

The South Korean visitors expressed surprise that the North Korean factory was better equipped than they had expected it to be.

“There is still room for improvement, but the North’s manufacturing facilities are much more modernized than I thought,” said Hwang Eun-yeon, a manager with Posco. “With South Korea’s support and cooperation, the North will be able to make improved products.”

The South Koreans toured the Korea Computer Center, a state-run software developer. The North’s word processor program and a medical test program were presented to the rare South Korean visitors. A cerebral vessel measurement machine, developed by the computer center, is currently on sale in the South at the price of $20,000 per unit. Among the delegates, the businessmen showed particular interest in a Korean version of the Linux operation system that had been developed by the North.

“We have sent 200 specialists to China for training and joint development,” Kim Chol-ho, vice president of the computer center, said. “We want more active exchanges with South Korean information technology companies.”

The computer center was built in 1990 with funding from North Korean residents in Japan, and the Cabinet’s software industry bureau has been overseeing the institute since 2002. The center employs about 1,500 elite graduates of North Korea’s science schools with special funding from the government.

The delegates also attended an investment relation session hosted by the North’s Trade Ministry in the afternoon. The group is scheduled to attend the International Trade Fair and visit a glass product manufacturer today.

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Posted in Chongryun, Computing/IT, Foreign direct investment, South Korea | Comments Closed

Mindan-Chongryun make up?

Wednesday, May 17th, 2006

From Yonhap:

Two rival groups for Koreans living in Japan, divided by their loyalties to capitalist South Korea and the communist North, on Wednesday reached an epochal deal to end half a century of animosity.

The agreement came at a 40-minute meeting in Tokyo between the leaders of the pro-Seoul Korean Residents Union in Japan, known as Mindan, and the pro-Pyongyang General Association of Korean Residents in Japan, or Chongryon. It was the first time for the two groups’ leaders to ever have such a meeting.

Mindan and Chongryon are the two largest groups representing more than 600,000 ethnic Koreans in Japan, mostly descendants of Koreans who moved here voluntarily or were forced to during Japan’s 1910-45 colonization of the Korean Peninsula.

Mindan, which claims about 500,000 members, sides with South Korea and has been at loggerheads with Chongryon, composed of some 150,000 people who have supported the North for decades.

But the two groups agreed to make joint efforts for reconciliation, according to a joint statement by Mindan’s head, Ha Byung-ok, and his Chongryon counterpart, Seo Man-sul.

The two sides will also jointly organize or participate in events to commemorate the landmark inter-Korean summit in 2000 and Korea’s liberation from Japanese colonial rule in 1945.

Mindan and Chongryon will “make joint efforts to promote education and Korean culture, as well as work together for the welfare and the rights of the Korean community,” according to the statement.

For ethnic Koreans here, experts said, the meeting between the two groups’ leaders is tantamount to the 2000 inter-Korean summit that laid the groundwork for economic exchanges and various other reconciliatory efforts.

It reflects the two Koreas’ continued efforts for reconciliation and cooperation despite the North Korean nuclear arms crisis, they added.

From Joong Ang:

Half a century of animosity based on competing loyalties to either capitalist South Korea or communist North Korea came to a symbolic halt yesterday as the two leaders of Mindan, the Seoul Korean Residents Union in Japan, and Chongryon, the General Association of Korean Residents in Japan, announced their reconciliation here.

It was the first time that leaders representing the two organizations officially met since the founding of the two groups. Mindan was founded in 1946; Chongryon in 1955.

Ha Byung-ok, the head of Mindan’s central headquarters, visited yesterday a Chongryon office in Tokyo and held talks with So Man-sul, chairman of the pro-North Korean group. In the meeting, both sides agreed to cooperate on reconciliation efforts between the two groups.

An emotional Mr. Ha told his counterpart he had tears in his eyes while Mr. So said the moment was historically important and that both sides needed to build upon it.

Both sides will send representatives to an inter-Korean event in Gwangju, South Korea, to commemorate the June 15, 2000, summit meeting between then South Korean President Kim Dae-jung and the North’s leader Kim Jong-il. The two sides also agreed to co-host an event in Japan on Aug. 15 to commemorate Korea’s 1945 liberation from Japanese colonial rule.

In addition, the groups agreed to jointly promote ethnic education and culture to maintain their ethnic Korean roots and to work together to promote the status of ethnic Koreans in Japan.

Experts say the reconciliation between the two organizations is due to the improving ties between Seoul and Pyongyang and the recent election of Mr. Ha, who has been preaching reconciliation.

Nevertheless, since the move has been largely driven by Mr. Ha, there is some opposition inside the organization. In addition, the decreasing membership of Chongryon, from a peak of 200,000 members to about 50,000, along with recent pressure from the Japanese government on the organization through tax investigations, has also led to the cooperation, analysts say. Chongryon is a major source of foreign currency for North Korea. Mindan claims a membership of 500,000.

The shrinking population of ethnic Koreans in Japan and the marriage of ethnic Koreans to Japanese citizens has raised the sense of urgency by the groups to maintain their foothold in Japanese society.

From Korea times:

It is uplifting to hear that the leaders of pro-Seoul and pro-Pyongyang Korean residents in Japan got together Wednesday and agreed to end decades of confrontation between their groups. The hugging and hand-shaking between Ha Byong-ok, leader of the pro-Seoul Korean Residents Union in Japan (Mindan) and So Man-sol, chairman of the pro-Pyongyang General Association of Korean Residents in Japan (Chongnyon) at the latter’s headquarters signified the end of the division of Korean residents in Japan.
The Korean residents groups have been at odds over the last 50 years, symbolizing the territorial division of their fatherland. The invisible barriers between the people of the two organizations in Japanese society were said to have been stronger than the DMZ dividing South and North Korea. The animosity was so intense that the members of the different groups were reluctant to talk to each other even when they lived in nearby neighborhoods.

The ideological confrontations among the Koreans were actually nothing but a waste of energy for Japan’s largest ethnic group. The division hindered their efforts to enhance their rights and interests in Japanese society. The host government exploited the division of Korean society.

The move of the two groups to break the stalemate was greatly influenced by the intentions of their home states. The conciliatory agreement is largely based on the South-North Joint Declaration issued on June 15, 2000, on the heels of summit talks between President Kim Dae-jung and the North Korean leader, Kim Jong-il. It is hoped that the historic meeting between the leaders of the two groups will help turn their long-standing enmity and confrontation into reconciliation and harmonization for Korean residents of Japan.

However, some analysts say that the pro-Pyongyang group has been faced with a lot of difficulties politically and financially lately because of the revelations that North Korean agents abducted some Japanese citizens to North Korea. They say that Chongnyon would have no choice but to rely on Mindan to remain alive in Japanese society. That’s why the conciliatory move by Chongnyon is seen as a mere strategic decision to survive their current difficulties.

However, we judge the historic meeting to be significant. Whether the meeting was purely motivated or not will soon be known. The Korean residents in Japan are hoping to achieve ethnic solidarity in Japan through reconciliation while promoting education and Korean culture to protect their ethnic characteristics.

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Posted in Chongryun, Japan | Comments Closed

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