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Ground broken for ‘factory apartment’ in N.K. city of Kaesong

Wednesday, May 17th, 2006

From Yonhap: 

South Korea’s state-run industrial complex operator on Wednesday began work on a manufacturing and residential facility in this North Korean border city that will house 40 labor-intensive companies from the South.

The “factory apartment” will be completed in June 2007 and cost 21.1 billion won (US$22.3 million), the Korea Industrial Complex Corp. (KICOX) said.

The five-story building will have manufacturing areas, living quarters for workers, a training center for North Koreans and other amenities.

When completed, the landmark project is expected to provide 3,100 jobs to both South and North Koreans and annual production will top 22 billion won, it said.

A total of 15 firms have set up operations in the park or plan to move there. North Korea designated Kaesong as a special economic zone in 2002 to make it easier for South Korean companies to do business in the area.

The groundbreaking ceremony was attended by more than 200 officials and businessmen from the two Koreas. The South Korean representatives included Commerce and Industry Minister Chung Sye-kyun, KICOX President Kim Chil-doo, Hyundai Group Chairwoman Hyun Jeong-eun and STX Corp. Chairman Kang Duk-soo.

“The new project promises benefits for all sides, with South Korean companies benefiting from enhanced competitiveness as a result of cheaper manufacturing costs, while the North gets new jobs and chance to acquire important skills,” Chung said.

The minister stressed the South Korean government will do its part so that the ongoing process will continue.

In response, Ju Dong-chan, head of North Korea’s special zone management agency, said the North also wanted to make Kaesong into a world-class industrial complex. He said that despite difficulties, mutual goals of prosperity can be attained if the two Koreas work together.

KICOX said the facility would have considerable advantages over other plants in Kaesong in efficiency and cost savings and help the companies harness cheap but skilled North Korean labor.

“Providing comprehensive support for small companies under a single roof will help cut operational costs to a considerable degree,” a top executive involved in the project said, adding that pooling electricity, water, training and other logistical requirements will cut costs.

Making full use of favorable conditions provided by the new factory is expected to raise the competitiveness of companies that have to compete in the South Korean market with cheap imports from China and Southeast Asia.

The corporation said the 40 resident companies will be selected in the second half of the year and that many companies are likely to vie for factory space.

In addition to the groundbreaking ceremony, the Ministry of Commerce, Industry and Energy brokered the signing of 16 deals between companies operating in Kaesong and South Korean retailers and large manufacturers in an effort to help market their products.

Conglomerates such as Hyundai Mobis Co., South Korea’s top auto parts maker, and tech giant Samsung Electronics Co. agreed to purchasing contracts with companies based in the North Korean city, the ministry said.

“The latest pacts are expected to help boost sales of companies operating in Kaesong,” a ministry official said.

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

North Korea and China to build powerplants

Tuesday, May 16th, 2006

From the Joong Ang daily:

North Korea and China have agreed to jointly build two hydroelectric power plants on the Amnok River, also known as the Yalu River in China, on the border between the two countries, Chinese media reported yesterday. The site is where the ruins of a 2,000-year-old walled city and 2,360 “massive tombs” of Korea’s ancient Goguryeo kingdom were recently found.

According to the local newspaper Jilin Daily, North Korean delegates from the Ministry of Power and Coal Industries and China’s central government, along with Jilin provincial officials, signed the agreement at Changchun, the capital city of Jilin province, on Sunday.

North Korea and China had planned in 1995 to construct the two power plants. According to the accord, China and North Korea will each build a dam with a power plant.

China will begin construction on its dam as early as late this year, Chinese media said. The North is expected to build its dam about 16 kilometers south of the Chinese power plant.

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Kaesong (Gyeongeui) and Kumgang (Donghae) railway tests

Monday, May 15th, 2006

From Joon Ang daily:

South and North Korea have agreed in principle to conduct test runs on the Gyeongeui and Donghae railway lines across the Demilitarized Zone and will settle the essential military security procedures at general officer talks tomorrow.  If the two sides agree and the test runs do take place, their meaning and effects will be significant.

According to research by experts, the railways would enable North Korea to earn $300 million-$400 million annually from freight and service charges. Also, if Pyongyang could modernize its railroad facilities with outside help, it could be an opportunity for North Korea’s industry to record rapid growth.

For South Korea, the opening of the railroads could reduce logistics costs with the North by one-third, and it would help Seoul to emerge as a hub of northeast Asian logistics. The event also holds great symbolic meaning as it allows Korea to become a point of contact with continental Asia. The agreement is the first step to a project that could benefit both Koreas.

The question is North Korea’s attitude in the future. During the past two years, Pyongyang has agreed on the inter-Korea railway test runs only to go against its word later. This time the North agreed on a test run again and even fixed a date. Some analysts have suggested that the past promises were broken because North Korea demanded massive raw material aid from the South in exchange for agreeing to the tests.
But we do not want to pay unnecessary attention to matters of the past. Pyongyang, however, must bear in mind that unreasonable requests, like asking for Seoul’s concession on the Northern Limit Line in the Yellow Sea, will not be tolerated. It must also refrain from considering the test runs as a one-time event to get some additional aid.
The agreement was made during a period of increasing tension between South Korea and the United States regarding the application of pressure on North Korea.

Considering Washington’s financial sanctions on North Korea and its acceptance of North Korean refugees, there is little chance that the Bush administration will welcome the recent decision.

It is different here. But while welcoming advances in relations with North Korea, the majority of Koreans also believe that conflict with the U.S. is undesirable. Therefore, the government must have a responsible explanation to the people about the correlation between the agreement and relations with the Bush administration.

From the Korea Herald:

“The train wants to run further.” A sign bearing these words has stood for decades at the point on a western railway line where the track between Seoul and Pyongyang had been cut. Nearby, the rusting skeleton of a steam locomotive decays with the passage of time.

Following the 2000 Pyongyang summit between former President Kim Dae-jung and North Korean leader Kim Jong-il, work started to re-connect the Gyeongeui Line and another link along the East Coast. The delicate process of clearing numerous landmines in the heavily fortified border area attracted worldwide attention. The actual tracks, however, were only laid last December, evidence of the tardy pace of progress in inter-Korean relations.

Finally, the two Koreas last week agreed to conduct test runs of trains on the restored lines next Thursday. A South Korean train will travel from Munsan to Gaeseong in the North and a North Korean train from Mt. Geumgang will journey to Jejin in the South. Still, this does not signify the actual beginning of a railway service between the Koreas for passenger and cargo transportation, not even on a small scale.

The North Korean military is said to be standing in the way of opening the border-crossing rail route because they fear the exposure of military facilities along the tracks. But the real reason must be that Kim Jong-il is not ready to accept South Korean overtures for speedier and broader inter-Korean exchanges which would follow the completion of the railway link program.

Opening an inter-Korean railway link is of more than symbolic importance. Widely touted as “the iron silk road” during North-South dialogue, it would connect South Korea to the trans-Siberian and trans-China railways and enable cheaper and faster transportation of goods originating from the Pacific basin to Europe via land routes. North Korea could earn substantial income in the form of passage charges and expect foreign investment in logistics and other sectors.

The Pyongyang leadership is asked to make a wise, practical decision concerning the railway project which will be the first major step to integrate the North into the world economy.
 

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

South Korean, Japanese aiding DPRK smuggling

Monday, May 15th, 2006

From the Japanese Asahi:

A South Korean man with alleged connections to a sunken North Korean spy ship is suspected of masterminding the smuggling of nearly 1 ton of illegal drugs from North Korea, police said over the weekend.

The man, Woo Si Yun, 59, was arrested Friday and sent to prosecutors Sunday, along with gangster Katsuhiko Miyata, 58. Police also raided a North Korean freighter at Sakaiminato port in Tottori Prefecture.

Police suspect the two men smuggled hundreds of kilograms of stimulants in October 2002 by having plastic bags filled with drugs tossed from the freighter into waters off Matsue, Shimane Prefecture. The two prefectures are on the Sea of Japan coast, across from the Korean Peninsula.

The 54-year-old captain of a Japanese fishing vessel that allegedly picked up floating bundles of drugs was also sent to prosecutors Sunday on suspected violations of the Stimulant Drug Control Law.

Police suspect Woo carried out similar operations on two other occasions in 2002, for a total of almost 1 ton in smuggled drugs. The drugs, worth 60 billion yen on the streets, were most likely sold to gangs.

The total volume is 2.3 times more than the total stimulants confiscated in Japan in all of 2002. It amounts to about 33 million individual doses.

Woo’s bank accounts showed payments from known gangs dating back to 1998.

Similar smuggling attempts from North Korea, involving large quantities of drugs tossed into the sea to be picked up by accomplices, have grown since the 1990s, police said.

Friday’s arrests also confirmed a North Korean spy ship that sank off Kagoshima Prefecture on Dec. 22, 2001, after a gunbattle with the Japan Coast Guard, had ties to drug smugglers, police added.

A cellphone recovered from the salvaged ship had records of calls to Miyata’s gang office in Tokyo’s Itabashi Ward, they said. The prepaid phone also showed Woo was one of at least 10 contacts the crew had in Japan. Police suspect Miyata arranged the smuggling and sale of the drugs to underworld groups in Japan.

Before it sank, the ship’s crew were seen tossing sacks and drums overboard that police suspect contained drugs.

The spy ship is also believed to be the one used in a separate smuggling case in 1998, according to the coast guard.

Woo is believed to have traveled to Beijing and elsewhere about 40 times between 2001 and 2004.

Police suspect he may have entered North Korea via Beijing to arrange drug deals.

Besides three allegedly successful smuggling operations in 2002, Woo is also suspected of playing a role in another botched attempt. About 240 kilograms of stimulant drugs were found floating off Tottori Prefecture from November to December 2002.

Smugglers apparently failed to pick up the floating packs.

The same North Korean freighter Woo used reportedly was sighted in waters off Matsue around the same time, police said.

According to joint investigations by Tokyo and Tottori police, Woo received several bank transfers from gangs, thought to be payments for drugs.

In one case, a Fukuoka Prefecture-based gang paid Woo 8 million yen in December 1998, while a Saitama Prefecture group paid 10 million yen in August 2003, police said.

Woo was convicted of smuggling stolen cars in 2004 and served a prison term. He was recently released.(IHT/Asahi: May 15,2006)

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DPRK claims that US sanctions not that effective

Friday, May 12th, 2006

From the joong ang:

WASHINGTON – North Korea’s deputy ambassador to the United Nations, Han Song-ryol, dismissed the effect of U.S. financial sanctions on his country, saying that it is cooperating economically with China and Russia. Mr. Han spoke with the Joong Ang Ilbo correspondent here by phone, and said Washington was simply patting itself on the back in claiming the sanctions were effective.
“We have endured sanctions by the United States for 50 years. More sanctions won’t bring any special changes,” Mr. Han said, repeating that North Korea would step up its nuclear deterrence.
Told that there was a perception here that the North’s external financial resources had been drained, Mr. Han replied with a reference to his country’s juche (self-reliance) philosophy. He said the North’s economy was not export-oriented, but was fully self-sufficient. If foreign banks stopped dealing with the North, he said, it wouldn’t matter much.
Washington has threatened to impose financial sanctions on a Macao bank it says has engaged in money laundering for North Korean drug and cigarette smuggling. The bank has frozen assets in some accounts linked to North Korea. And despite Mr. Han’s professed indifference to those sanctions, Pyongyang has refused to return to nuclear negotiations until they are lifted, and specifically until the reported $24 million at the Banco Delta Asia is returned.
Mr. Han said Washington was accusing the North of counterfeiting U.S. currency and imposing sanctions without proof. “The assertion that there are secret funds in Swiss bank accounts is also of the same substance. Hasn’t the Swiss government announced that Washington’s claim is groundless?” asked Mr. Han. (It has not gone that far publicly, but the Swiss ambassador in Seoul said recently that evidence of questionably obtained assets in Swiss banks would be required for authorities to act.)
He said that Washington was raising human rights issues and financial sanctions because it saw no chance of getting favorable results in the North Korean nuclear talks. Mr. Han said that the recent acceptance by Washington of six North Korean defectors was also a move to press Pyongyang.
When asked what he thought on Washington’s claim that photographs existed of North Korean diplomats exchanging counterfeit money, the deputy ambassador said that if that were the case, CNN would already have aired them. He said Pyongyang’s policies would not be affected even if U.S. officials favoring negotiations saw their influence weakened and hardliners gained the upper hand.

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DPRK/ROK railway safety talks

Friday, May 12th, 2006

Interesting stuff from the Korea Times:

Military generals of South and North Korea will hold the fourth round of talks from May 16 to 18 on easing tension along the heavily fortified border and avoiding accidental clashes in the West Sea border, the Defense Ministry said on Friday.

The talks, to be held at the truce village of Panmunjom, will also deal with ways to guarantee the safe passage of those using cross-border railways and roads, ministry officials said.

The cross-border passage issue is drawing keen attention as former President Kim Dae-jung hopes to travel to North Korea by using an inter-Korean railway next month amid the prolonged international dispute over Pyongyang’s nuclear programs.

Under a temporary agreement struck in 2003, the two Koreas guarantee the safety of traffic across the Demilitarized Zone (DMZ) on roads, but the pact failed to include the passage on railroads, the officials said.

“The opening of inter-Korean railways and roads has long been on the table,’’ Col. Moon Sung-mook, chief of the ministry’s North Korean affairs, said in a briefing. “The South Korean delegation this time will also try to reach an agreement with the North on the matter, as both sides already share the necessity for it.’’

The South and North have almost completed construction work on reconnecting two railway lines that have been closed for half a century. North Korean military authorities, however, have been reluctant to give the green light to the railway linkage.

The 27.3-kilometer Tonghae line crosses the border at the Korean Peninsula’s eastern line, while the Kongui line, some 25.5 kilometers long, connects the two border cities of Munsan in South Korea to Kaesong in North Korea.

Working-level talks on the railway linkage have been underway since the North accepted the former president’s second trip to the communist nation late last month. The two sides are scheduled to hold a meeting on May 16 at the North’s Mt. Kumgang to discuss details on Kim Dae-jung’s visit to Pyongyang, according to the Unification Ministry.

Establishment of a joint fishing area in the disputed West Sea border and a direct hotline between the two authorities will be on the top of the agenda, Moon added.

The military talks in March ended without substantial progress as the North stuck to its long-held position that the sea border should be remapped.

The Northern Limit Line (NLL) has been controversial since the 1950-53 Korean War, which ended in an armistice, not a peace treaty. Seoul views the NLL as the de facto borderline, while Pyongyang denies it, claiming the U.S.-led United Nations Command unilaterally decided it after the war.

A series of naval clashes over the years in the rich fishing grounds of the West Sea have caused scores of casualties on both sides.

Maj. Gen. Han Min-gu, the ministry’s chief policymaker, will represent the five-member South Korean delegation at the upcoming talks, while the North’s delegation will be led by Maj. Gen. Kim Yong-chul, officials said.

Inter-Korean relations have thawed since the historic summit in 2000. But tension persists along the world’s most fortified border. The South maintains 690,000-strong forces against the North’s 1.1-million military.

In the first two previous talks, the sides agreed on a set of confidence-building measures such as dismantling propaganda facilities along the 248-kilometer land border in phases. Pyongyang, however, has failed to fully implement the agreements after Seoul airlifted 468 North Korean defectors from a third nation. It also criticized the annual joint military drills between South Korea and the United States.

 

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Posted in Foreign direct investment, Kaesong Industrial Complex (KIC), Railways, South Korea | Comments Closed

WFP asks ROK for DPRK AID

Friday, May 12th, 2006

any letters I missed in that title?

From the Korea Times:

WFP Asks South Korea to Contribute Food to North
By Christopher Carpenter

A representative of the United Nations World Food Program said on Friday that South Korea was considered a potential donor in the new North Korean food aid program.
At a press conference in Seoul, Tony Banbury, the WFP’s regional director for Asia, said he met with officials Friday at the South Korean Ministry of Unification and the Ministry of Foreign Affairs and Trade about contributing to the program.

“Our discussions were very positive,’’ Banbury said. “They are ongoing and I think I’ll leave it at that.’’

Bae Young-han, a spokesman for the Ministry of Foreign Affairs and Trade said that while he could not confirm the meeting with Banbury, South Korea was discussing participating in the WFP effort.

“In the past, we contributed through the WFP channel,’’ Bae said.

Banbury came to Seoul on the heels of signing a letter of understanding with Pyongyang Wednesday to resume aid to the North. It was discontinued in December 2005 when North Korea asked that food aid be replaced with developmental aid.

Banbury said assistance will not be on the scale it was when they left North Korea last year, but that the assistance being provided was better than discontinuing the program completely. Around 1.9 million people will benefit under the new agreement, down from the 6.5 million the WFP was feeding when it left in December.

“The alternative to this was closing down the operation entirely and walking away,’’ he said.

The new program will provide three types of assistance. Roughly half of the 150,000 tons of food that will go to the North over the next two years will be designated for pregnant and nursing mothers, and for babies that are younger than six months of age.

Primary aged school children will receive daily packages of enriched biscuits that provide 75 percent of their daily vitamin and mineral requirements. Finally, communities involved in projects that will increase their ability to produce food will be rewarded with food aid.

“As they do the work, we will pay them in food,’’ Banbury said.

The new program, which Banbury said the North considers a transitional program that will lead to development aid, allows the 10 WFP staff who will be in North Korea to monitor the food distribution system.

The staff will have access to the institutions where food is being distributed, to the community development projects, to areas of the country that may need further assistance and to the logistical operation that brings food into the country and stores it.

Banbury said the WFP would strictly enforce its monitoring policy of “no access-no food.’’

While Banbury said North Korean officials never admitted they needed emergency food assistance, the WFP offered to increase the scope of the program if it were wanted.

“That’s a conversation we might continue in the future,’’ he said.

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Posted in Public Distribiution System (PDS), South Korea, UN World Food Program | Comments Closed

World Food Program back to DPRK

Friday, May 12th, 2006

From the Washington Post:

After a government-imposed shutdown of more than four months, the World Food Program announced Thursday that it would resume food aid to hungry North Koreans, but on a sharply reduced scale.

Tony Banbury, the U.N. agency’s regional director for Asia, said he signed an accord with the government in Pyongyang that will allow 10 staff members to operate a $102 million feeding program, helping 1.9 million of the neediest North Koreans over the next two years.

The accord, reached Wednesday after prolonged negotiations, ended the uncertainty that has prevailed since the DPRK government announced in August that it would accept development aid but no longer wanted food aid. That forced the World Food Program, which runs North Korea’s main feeding operation, to halt work at the end of December.

Banbury called the new agreement “an important breakthrough” for North Korea’s undernourished poor. But he said the number of people receiving food would drop considerably under restrictions laid down by North Korean officials — from 6 million in 163 counties under last year’s $200 million-plus program to 1.9 million in 30 counties under the new program.

“They explained this by saying they needed less food, that their crops were getting better and that they did not want to create a culture of dependency,” Banbury told reporters during a stop in Beijing.

Because Kim’s government is highly secretive, its assertion that more food aid was unnecessary could not be verified, Banbury said. But he expressed skepticism, noting that North Korea recently sought 500,000 tons of grain from South Korea and in recent years has consistently produced nearly 1 million tons less than its annual requirement of 5.3 million tons.

Economic reforms that began in 2002 have gradually loosened North Korea’s rigidly Stalinist system and injected some life into the economy, according to reports from Pyongyang. In particular, private food markets have been allowed in recent years, providing previously unheard-of choices for those with money. Food prices soared, however, prompting farmers to sell their crops in the private sector rather than to the public distribution system at controlled state prices. This in turn made life harder for the poorest among North Korea’s 23 million people, who rely on public rations.

In response, the government announced recently that the public distribution system would resume its monopoly on food grains. How this step ties in with the economic reforms was not explained. But Banbury said the agreement to resume U.N. food aid suggested that North Korean officials realized the public distribution system could not get food to everyone who needed it despite their earlier assertion that it was time to move on to development aid.

Production and distribution of U.N. food aid will resume immediately, he said, but it will take several weeks to get operations up to speed. As it was previously, most of the food aid will be in the form of vitamin-enriched biscuits for children, enriched porridge mixes for infants and supplements for pregnant women and the elderly.

Although the number of staff members has been shaved from 48 to 10, Banbury said U.N. officials would be able to verify that the food was going to the poor and not government officials or the military. Diversion of food has been a major concern of the United States and other U.N. donor countries since Kim proclaimed that soldiers and other officials have priority in North Korea.

“We will not be providing food to any areas of the country where our staff does not have full access,” Banbury said.

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Posted in Agriculture, General markets (FMR: Farmers Market), Public Distribiution System (PDS), UN World Food Program | Comments Closed

Kaeson railway line negotiations

Thursday, May 11th, 2006

From the Korea Herald:

South and North Korea resume talks today to discuss the opening of an inter-Korean railway link ahead of former President Kim Dae-jung’s visit to the North in June, an official at the Unification Ministry said yesterday.

In the two-day talks, the schedule for train test-operations and the inauguration ceremony of the cross-border railroad will top the agenda, an official said.

Last month the two Koreas failed to reach an agreement on the issue as the North demanded South Korea provide additional material and equipment to complete the construction of the foundation for its rail station.

Earlier this year, the ministry notified Pyongyang of Kim’s wish to revisit the communist state to meet North Korean leader Kim Jong-il in June. The former president wishes to travel via the reconnected inter-Korean rail link, making the inaugural train journey from Seoul to Pyongyang.

The two Koreas will hold further inter-Korean working-level talks next week from May 16 to work out the details of Kim’s second visit to the North. South Korea hopes a test-run of cross-border trains can be conducted before Kim’s visit to the reclusive country next month.

The two Koreas have almost completed construction work on reconnecting the link that has been closed for half a century. The reconnection of two railway lines that cross the 248-kilometer-long Demilitarized Zone is one of the achievements of the landmark summit in 2000 between then South Korean President Kim Dae-jung and North Korean leader Kim Jong-il.

The 27.3-kilometer Gyeongui railway connects the two border cities of Munsan in the South and Gaeseong in the North, while the 25.5-kilometer Donghae railway crosses the border at the peninsula’s eastern coast.

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Seoul to offer medical assistance

Thursday, May 11th, 2006

Yonhap
5/11/2006

The head of South Korea’s National Red Cross is to visit North Korean capital Pyongyang later this month to discuss enhancing medical cooperation between the divided Koreas, Red Cross officials said Thursday.

Red Cross President Han Wan-sang is to be accompanied by 40 officials including hospital heads and 13 officials from the Korean Hospital Association, on his five-day trip to the communist state from May 26, the officials said.

“President Han is scheduled to meet with officials from the North Korean Red Cross, including its Chairman Chang Jae-on, to hold negotiations on ways to develop and increase cooperation and exchanges between South and North Korea,” the Red Cross said in a statement.

Accompanied by heads and officials from other humanitarian organizations and 12 pharmaceutical companies, the Red Cross chief will deliver over 3.7 billion won (US$3.9 million) worth of medical supplies and equipment to the impoverished North, the statement said.

The 41-member delegation will fly directly to the North Korean capital, according to the Red Cross officials.

Red Cross officials from the two Koreas occasionally hold talks to resolve humanitarian issues between the divided countries, such as the tens of thousands of people who remain separated from their family members since the end of the 1950-53 Korean War.

The sides are scheduled to meet to arrange upcoming rounds of reunions between the separated families in June and August.

The South Korean Red Cross provides large amounts of fertilizer and food aid to the North in addition to its annual medical and technical support for the impoverished country, which has depended on outside handouts to feed a large number of its people since the mid 1990s.

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Posted in Agriculture, Health care, International/Korean Red Cross, South Korea | Comments Closed

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