North Korean Economy Watch

UPDATE: Martyn Williams writes in PC World (11/5/2010):

A new PDA (personal digital assistant) has hit stores in North Korea, according to a student who writes a blog from the secretive state.

The device, which doesn’t appear to carry any branding, has a color touchscreen display that occupies its entire front, according to photos published on the “Pyongyang Show and Tell” blog. The Russian-language blog is maintained by a Russian student who is studying in the country.

Installed software includes a Korean dictionary and translation dictionaries pairing Korean to and from Russian, English, Chinese and German, the blog report said. There are several basic utility programs and an electronic map of the country although the PDA does not feature GPS (global positioning system).

There is also no wireless networking so data transfer has to take place via a USB connection to a Windows or Linux computer. Data can also be transferred via MicroSD card, which is the same as used in domestic cell phones.

“Comparing it to modern things like, let’s say, the iPad, it’s nothing,” the blog’s author, who didn’t wish his name to be used, told IDG News Service via email. “It’s still good as a dictionary, except I don’t see any other advantages.”

It’s not the first PDA in North Korea.

In 2003 the country’s media said “Hana 21,” a PDA developed by the Samilpo Information Center, had been put on sale. The device included English-Korean and Korean-English dictionaries as its main function and also had several games and a basic word processor. Input was by pen and touchscreen.

According to published images of the Hana 21, the two devices are different.

At the time the Hana 21 was said to cost around 200 euros (US$182 at the exchange rate of the time).

The new PDA that hit stores recently costs around US$140.

“It’s still hard to buy for a Korean, but there are many people who keep their money for years and can afford it,” the student said via email.

PDAs have long been out of fashion in many countries after their features and functions were duplicated by smartphones. North Korea has a 3G cellular network, but most cell phones have only basic features.

ORIGINAL POST: Show and Tell Pyongyang introduced the world to the DPRK’s version of Linux: Red Star.  Now he has introduced us to the DPRK’s new Personal Digital Assistant (PDA).

Here are pictures from the Russian web page:

According to the Russian-language web page (via Google Translate):

A few weeks ago in North Korea has started selling the first PDA. In all the computer shops you can see the advertising of the new items. [I] offer a small review of this device.

On sale are a few options. The difference between them – is the amount of internal memory and a built-in slot for the stylus. The most feature-rich [costs] $ 140 and has 8 gigs of internal memory and a slot for the stylus, so you do not accidentally lose it.

In addition, there is a slot for MicroSD memory cards – the same as in the local mobile phones.

The main function of which is worth noting (and more generally for which there is a fly sabzh), an electronic dictionary Samhyn (삼흥) with the Russian language. It is no secret that South Korea produced electronic translators, but, according to eyewitnesses, the Russian language is absent in them as fact. And in this case, Russian-Korean and Korean-Russian dictionaries most voluminous in the number of vocabulary words. Besides, there are English, Chinese and German. Also has a large Korean Wiki Grand Korean Dictionary.

So for me personally, the main value of the PDA – is an electronic dictionary, which can carry with them always and everywhere. And the rest is not so important.

So what else is there? There is a map of Korea’s system of teaching foreign languages (English, Chinese). By the way, about a month ago there was an opportunity to put maps on your mobile phone. Application free of charge and requires activation. Put it on a large computer center of the city. []

Device has access to TV, headphones and a USB-slot. Possible to connect devices to both Windows, and Linux (in this case, Red Star)

On the whole – everything is simple and works quite well. At the moment, the firmware needs some work, not all features fully implemented, but the Korean comrades promise to update and refine.

If anyone else has more information, please let me know.

According to the Korea Times:

The U.N. Office for the Coordination of Humanitarian Affairs reported Wednesday that North Korea is the 11th largest recipient of its emergency funds in the world, and third in Asia.

Pyongyang received $13.4 million or 3.6 percent of the $372 million that the Central Emergency Response Fund (CERF) allocated from January through September.

CERF, established in 2006, is a U.N. fund created to aid regions threatened by starvation and natural disasters.

Pakistan, which suffered catastrophic floods in August, received 40 million, the largest allocation in CERF’s history, followed by Haiti, Niger and Congo.

Sri Lanka, which received $13.8 million, placed second among Asian recipient countries.

North Korea ranks 173 among 177 countries on the human development index, according to the Human Development Report 2007/2008, published by the U.N.

The U.N. estimates that five out of 1,000 children in the North die before they reach the age of five.

Experts say some 23 percent of North Korean children under five were malnourished between 2000 and 2007 and 32 percent of the population in the Stalinist regime was undernourished between 2003 and 2005.

Josette Sheeran, head of the World Food Program (WFP), claims that the U.N.’s flagship agency is falling short of funds to feed hungry people in the impoverished and reclusive nation.

The WFP received $106.2 million, the largest amount among aid agencies, from CERF in 2010, followed by UNICEF, which received 86.1 million.

The WFP claims that it can only help a quarter of the 2.5 million North Korean children suffering from malnourishment due to a shortage of funds.

The WFP helps feed some 670,000 people, mainly children in the communist North.

Read the full story here:
NK is 11th largest receiver of UN CERF cash
Korea Times
Lee Tae-hoon
11/3/2010

According to Yonhap:

North Korea’s Cabinet premier is visiting northeastern China to meet with ranking officials there and speed up joint economic projects between the communist allies, sources here said Wednesday.

Choe Yong-rim arrived in the city of Harbin in Heilongjiang Province earlier this week and visited the city of Changchun in a nearby province on Wednesday, the diplomatic sources said.

Choe, promoted by North Korean leader Kim Jong-il at a parliamentary convention in June, is seen as trying to consolidate the ties between Pyongyang and Beijing as the two countries seek to develop a joint economic bloc that draws from resources in China.

His visit comes after Kim visited the area in late August. During a summit between the North Korean leader and Chinese President Hu Jintao, the countries promised to boost their political and economic cooperation.

Choe’s trip, also reported by a local daily here, comes after 12 of the highest-ranking North Korean mayoral and provincial chiefs visited the same region in October, touring food, chemical and agricultural factories along with other major facilities.

Believed to be a key aide to North Korea’s next leader, Kim Jong-un, the premier inspected electronics and medicine companies and a agricultural research center in Harbin on Tuesday, the sources said.

Choe, 79, formerly chief of the Pyongyang department for the ruling Workers’ Party, has been noted for his rise to power in the past several months. He gave a speech at a mass rally on May 30, where as many as 100,000 North Koreans reportedly denounced South Korea and the United States for blaming Pyongyang for the sinking of a South Korean warship in March.

Read the full story here:
DPRK premier in northeastern China for economic cooperation
Yonhap
11/3/2010

Richard Stone writes in 38 North:

The curtain is rising on a bold experiment to engage North Korea’s academic community—and possibly shape the country’s future. On October 25, 2010, Pyongyang University of Science and Technology, or PUST, opened its doors to 160 elite North Korean students. By improving North Korea’s technical prowess, PUST might nudge the country’s tattered manufacturing-based economy toward an information-based economy.

“Our purpose is the globalization of North Korea through PUST. In that way, their economy can gradually develop, which will make it easier for reunification later,” says Park Chan Mo, former president of the National Research Foundation of Korea and one of four founding committee chairs of PUST. More initiatives are in store after South-North relations improve, says Oh Hae Seok, Special Adviser on Information Technology (IT) to South Korea’s President Lee Myung Bak. “The South is ready to assist the North by building an IT infrastructure and supporting IT education, as long as the North opens its door,” he says.

PUST will test North Korea’s appetite for engagement. Perhaps most discomfiting to the North is that the new university is led and bankrolled by devout Christians. The North Korean government espouses atheism and takes a dim view on South Korean evangelists, particularly for their role in an “underground railway” in northeastern China that steers defectors to safe havens. PUST leaders and professors, primarily ethnic Koreans, have promised not to proselytize.

PUST’s main mission therefore is to lead North Korea out of a scientific wilderness. The North is light-years behind industrialized nations in many areas of science and technology. It excels in a few spheres. For instance, North Korea is notorious for its skill at reverse-engineering long-range missiles and fashioning crude but workable plutonium devices. Less well known, the North has developed considerable expertise in information technology—and has staked its future on it. “North Korea has chosen IT as the core tool of its economic recovery,” says Park. But it has a poor grasp on how to translate knowledge into money. “Instead of just giving them fish, we will teach them how to catch fish,” Park says.

There are serious risks in giving North Korea a technical assist, according to PUST’s critics. Opinion in South Korea is split on PUST; many people have voiced concerns. The chief worry is that PUST students could feed information or lend newfound expertise to the North Korean military. To minimize these risks, PUST’s curricula have been vetted by government and academic nonproliferation experts.

To proponents, the new venture’s benefits far outweigh the risks. PUST has been promised academic freedom, the likes of which has been virtually unknown in North Korea, including campus-wide internet access. “We hope that PUST will open channels to the outside,” says Nakju Lett Doh, an assistant professor of electrical engineering at Korea University in Seoul and member of PUST’s academic committee.

Few people of university age or younger can imagine a world without internet. But it’s rare a North Korean of any age has tasted this forbidden fruit. The government takes infinite care to shield innocent minds from corrosive facts about the Korean War, descriptions of life in modern South Korea, and western notions of freedom of expression, among other things. Instead, the Garden of Juche offers Guang Myung, or Bright Light: an Intranet not connected to the outside world.

When I visited Pyongyang on invitation from the DPRK Academy of Sciences in July 2004, my hosts gave me a tour of the Central Information Agency for Science and Technology’s computing center and showed me the Guang Myung home page, which reminded me of Yahoo. They claimed the system has tens of millions of records, including digital tomes on agriculture and construction as well as the complete writings of Kim Il Sung.

Since then, fiber optic cables have spread Guang Myung to the far corners of the nation. “The main purpose is to disseminate scientific and technological information,” says Lee Choon Geun, chief representative of the Korea-China Science & Technology Cooperation Center in Beijing. On a visit to Pyongyang a few years ago, Lee, an expert on North Korea’s scientific community, witnessed Guang Myung in action, including a live lecture broadcast over the Intranet. At the time, he says, Kim Chaek University of Technology had around 500 Pentium 4’s and 5’s connected to the system. He estimates that nationwide, tens of thousands of computers of all types are now linked in. However, it’s not clear how effective Guang Myung is outside Pyongyang, where clunky routers funnel information to ancient machines—remember 386s and 486s? Another major woe is an unstable electricity supply that regularly fritzes electronics. Lee, who has visited North Korea 15 times, says that when he asks what scientists need most, they request laptops, whose power cord adaptors and batteries can better handle electrical fluctuations.

Indeed, it’s a formidable job to erect an IT infrastructure inside a cocoon. South Korea has lent a hand. With the government’s blessing, private organizations in the South have sent approximately 60,000 IT publications—periodicals and books—to North Korean universities, and IT professors from the South have visited the North for lecturing stints, says Oh. South Korean groups have also helped train North Korean computer scientists in Dandong, China, just across the border from North Korea. The training center had to close earlier this year due to budget cuts, says Lee.

The juche philosophy embraces self-reliant efforts to gather technical information from abroad. North Korean diplomats are one set of eyes and ears. They collect journal articles, textbooks and handbooks, surf the Web and ship any seemingly useful information to Pyongyang, where analysts evaluate it and censors clear it for posting. When sent via internet, information is routed primarily through Silibank in Shenyang in northeastern China. North Korea has also deployed abroad around 500 IT specialists in the European Union and dozens more to China—in Beijing, Dalian, Shanghai, and Shenyang—to acquire knowledge for the motherland. “Through them a lot of information goes to North Korea,” says Park.

Such activity may seem like a packrat cramming its nest with equal portions of usable materials and shiny baubles. But it has paid off in at least one area: software development. “They are developing their own algorithms,” says Doh, an expert on control system theory. Even though North Korea’s programmers are almost completely isolated from international peers, they lag only about 5 to 6 years behind the state of the art in South Korea, Doh says. “That’s not that bad.” The Korean Computing Center and Pyongyang Information Center together have around 450 specialists, and universities and academy institutes have another 1,000 more experts on computer science, says Lee. And all told there are about 1,200 specialized programmers.

The programmers have enjoyed modest commercial success. The state-owned SEK Studios in Pyongyang has done computer animation for films and cartoons for clients abroad. And software developers have produced, among other things, an award-winning computer version of the Asian board game Go. “Their software is strong,” says Park, a specialist on computer graphics and simulation. “They are very capable.”

But the resemblance to IT as we know it ends there. “In North Korea, IT is quite different from what most people think,” says Lee. Most computing efforts these days are focused on computerized numerical control, or CNC: the automation of machine tools to enable a small number of workers to produce standardized goods. “Their main focus is increasing domestic production capacity,” says Lee. North Korea’s CNC revolution is occurring two to three decades after South Korean industries adopted similar technologies. And North Korea is struggling to implement CNC largely because of its difficulties in generating sufficient energy needed to make steel—so its machinery production capacity is a fraction of what it used to be—and it lacks the means to produce sophisticated integrated circuit elements.

Antiquated technology may be the biggest handicap for North Korea’s computer jocks. North Korea “doesn’t have the capacity to make high technology,” says Kim Jong Seon, leader of the inter-Korean cooperation team at the Science and Technology Policy Institute in Seoul. North Korea is thought to have a single clean room for making semiconductors at the 111 Factory in Pyongyang. Built in the 1980s—the Stone Age of this fast-paced field—the photomask production facility is capable of etching 3 micron wide lines in silicon chips. South Korean industry works in nanometer scales. The bottom line, says Kim, is that in high technology, “they have to import everything.”

That’s a challenge, because no country—China included—openly flouts UN sanctions on high-tech exports to North Korea. Any advanced computing equipment entering the country is presumably acquired through its illicit missile trade and disappears into the military complex. North Korea’s civilian computer scientists are left fighting for the scraps. One of only five Ph.D. scientist-defectors now known to be in South Korea, computer scientist Kim Heung Kwang, fled North Korea in 2003 not for political reasons or because he was starving—rather, he hungered to use modern computers.

To help North Korea bolster its budding IT infrastructure and not aid its military, PUST will have to walk a tightrope. School officials have voluntarily cleared curricula with the U.S. government, which has weighed in on details as fine as the name of one of PUST’s first three schools. The School of Biotechnology was renamed the School of Agriculture and Life Sciences because U.S. officials were concerned that biotech studies might be equated to bioweapons studies, says Park. North Korean officials, meanwhile, forbid PUST from launching an MBA program—a degree too tightly associated with U.S. imperialism. “So we call it industrial management,” Park says. “But the contents are similar to those of an MBA.”

Besides cleansing PUST of any weapons-grade information, Park and university representatives are working with the U.S. Commerce Department to win export licenses for advanced computing equipment and scientific instruments not prohibited by dual-use restrictions. Approval is necessary for equipment consisting of 10 percent or more of U.S.-made components. “You can attach foreign-made peripheral devices and reduce U.S. components to less than 10 percent, but that’s a kind of cheating,” Park says. “We want to strictly follow the law.”

This improbable initiative in scientific engagement was a long time in the making. PUST’s chief architect is founding president Kim Chin Kyung, who in 1998 established his first venture in higher education: Yanbian University of Science and Technology in Yanji, the capital of the Yanbian Korean Autonomous Prefecture in northeastern China’s Jilin Province, just across the border from North Korea. A businessman who studied divinity in university, Kim, who goes by his English name James, was accused of being a spy on a visit to North Korea in 1998 and imprisoned there for six weeks. He stuck with YUST, however, and in 2001, North Korean education officials visiting the university stunned Kim by inviting him to establish a similar university in Pyongyang. Kim got a rapturous response when he pitched the idea to YUST’s sponsors.

Progress came in fits and starts. PUST was originally envisioned to open in 2005, but work on the initial 17 buildings of the $35 million, 100-hectare campus in southern Pyongyang’s Rakrang district was completed only last year. North Korean education officials have promised the school academic freedom and internet access. Such startling privileges will be doled out byte by byte. “In the beginning, they are allowing us to do emailing,” says Park. Full internet access is expected to come after PUST earns their keepers’ trust. “To do research, really you have to use the internet. The North Korean government realizes that. Once they know students are not using the internet for something else, it should be allowed,” Park says.

While YUST and PUST may both have ardent-Christian backers and cumbersome acronyms, the atmosphere on the two campuses will be markedly divergent. In Yanji, encounters outside the classroom are common: faculty and students even dine together in a common hall. “YUST professors and students are like one family,” says Park.

In contrast, PUST students and faculty will inhabit two entirely different worlds that only merge in the classroom. The North Korean government handpicked the inaugural class of 100 undergraduates and 60 graduate students, including 40 grads who will study IT. All will study technical English this fall, then in March a wider roster of courses will become available after key professors and equipment arrive on campus. A student leader will shepherd students to and from class to ensure that no lamb goes astray. “There will be no way to teach the gospel,” says Doh.

PUST professors expect to be impressed with the students, selected from Kim Il Sung University and Kim Chaek University of Technology. “These are the most brilliant students in North Korea,” says Doh. PUST plans to ramp up enrolment to 2,000 undergrads and 600 graduate students by 2012. To expose these young, agile minds to a wide range of ideas, PUST plans to fly in a number of visiting professors during the summer terms. They also intend to seek permission for students from other Pyongyang universities to attend the summer sessions. As trust develops, PUST hopes that some of its students will be able to participate in exchange programs and study abroad.

PUST’s success may hinge on the disposition of North Korea’s leader in waiting. Kim Jong Un was tutored privately by a “brilliant” graduate of Université Paris X who chaired the computer science department at Kim Chaek University of Technology before disappearing from public view in the early 1980s, says Kim Heung Kwang, who studied at Kim Chaek before working as a professor at Hamhung Computer College and Hamhung Communist College. After defecting and settling in Seoul, Kim founded North Korea Intellectuals Solidarity, a group of university-educated defectors that raises awareness of conditions in North Korea.

According to internal North Korean propaganda, Kim Jong Un oversees a cyberwarfare unit that launched a sophisticated denial-of-service attack on South Korean and U.S. government websites in July 2009. South Korea’s National Intelligence Service blamed the North, which has not commented publicly on the attack. Kim Jong Un’s involvement cannot be confirmed, says Kim Heung Kwang. “But Kim Jong Un is a young person with a background in information technology, so he may desire to transform North Korea from a labor-intense economy to a knowledge economy like South Korea is doing.”

Another big wildcard is North-South relations. After the sinking of the Cheonan, South Korea froze assistance to the North. In the event of a thaw, “the South wants to build a digital complex” in the Demilitarized Zone (DMZ) or in South Korea similar to the Kaesong industrial complex, says Oh. This, he says, “would be the base camp of North Korea’s IT industry development.” North Korea has reacted lukewarm to the idea: It would prefer that such a venture be based in Pyongyang, says Lee. To facilitate denuclearization and help skilled North Korean workers adapt to market economics, the Science and Technology Policy Institute in Seoul has proposed the establishment of an Inter-Korean Science and Technology Cooperation Center modeled after similar centers established in Kiev and Moscow after the Soviet breakup.

Such projects, if they were to materialize, along with well-trained graduates from PUST, may help pull North Korea’s economy up by its bootstraps. “We are trying to make them more inclined to do business, to make their country wealthier,” says Park. “It will make a big difference once they get a taste of money. That’s the way to open up North Korea.”

Additional information:
1. Here are previous posts about PUST.

2. Here are previous posts about the DPRK’s intranet system, Kwangmyong.

3. Here is a satellite image of PUST.

Read the full story here:
Pyongyang University and NK: Just Do IT!
38 North
Richard Stone
11/1/2010

UPDATE (10/29/2010): According to the Straits Times:

Singapore has tightened its trade controls by imposing new prohibitions on transactions with North Korea and Iran.

Singapore Customs said in a statement on Friday that the latest regulatory revisions, effective from Nov 1, are timely in the light of ongoing global efforts to curb illicit diversions of controlled goods and technology to rogue entities and sanctioned countries such as North Korea and Iran. Both countries stand accused of trying to start nuclear weapons programmes.

At present, prohibitions on them include arms or related materials, certain vacuum systems and pumps, compressors and gas blowers. They also cover luxury goods such as cigars, wines and spirits and even plasma televisions. But in the revised list, there will be new prohibitions on any arms as defined by the United Nations Register of Conventional Arms, and related materials.

These include among other things: weaponry, battle tanks, combat aircrafts, warships, armoured combat vehicles. The latest amendments to the list of prohibited imports, exports and goods to or from North Korea and Iran are in line with recent United Nations Security Council Resolutions’ sanctions imposed on the two countries, as well as Singapore’s continuous commitment to its international obligations.

Singapore’s trade with North Korea and Iran accounted for less than 0.4 per cent of the Republic’s total trade value of $747 billion last year. The small amount of trade typically revolved around commodities and other agricultural, tobacco and consumer goods.

Traders are strongly encouraged to implement effective internal export control compliance measures to screen the consignees and end-users of their exports, Singapore customs said.

ORIGINAL POST: According to Today Online:

After relying on its existing laws for more than a year, Singapore is adding more bite to its implementation of United Nations sanctions against North Korea.

According to documents on the Government’s electronic gazette website, the Republic is introducing additional legislation to meet its obligations to the resolution adopted in June last year by the UN Security Council (UNSC).

From Nov 1, it will be an explicit offence to breach the measures imposed by the UNSC on various individuals, entities and goods and services from the hermit kingdom.

The prohibitions will apply to all persons in Singapore and any Singaporean abroad and cover a wide range – from financial and bunkering services to the supply and procurement of certain items.

These not only include military-related material but also luxury goods, if it is believed to be in relation to any person who might be involved in North Korea’s weapons programmes. The Singapore Customs website lists 14 categories of luxury goods, such as cigars, wines and spirits, fur products, perfumes and cosmetics, plasma televisions, personal digital music players and luxury cars. Works of art and musical instruments are also included.

When the UNSC adopted the resolution last year, Singapore’s Permanent Representative to the UN, Ambassador Vanu Gopala Menon, had informed the council that the city-state had the “necessary legislative framework in place to meet its obligations”. Such laws include the Strategic Goods (Control) Act, the Merchant Shipping Act and the Immigration Act.

When contacted, a Ministry of Foreign Affairs spokesperson said the Republic “is obliged to implement the UNSC Resolutions on North Korea. We take these obligations seriously”.

But in his letter dated Aug 3 last year, Mr Menon also said that a regulation was being drafted to give effect to the provisions of Resolution 1874 (2009), which had been imposed in response to North Korea’s second nuclear test in May last year.

The upcoming legislation comes more than a year after the Monetary Authority of Singapore prohibited financial institutions from carrying on transactions and services with North Korea relating to banned material and listed individuals.

Few companies incorporated in Singapore have dealings with North Korea, though.

One such company is Maxgro Holdings.

According to its website, it is a concession owner and infrastructure development company that holds a 70-per-cent stake in a joint venture with the Pyongyang government to grow eight million hard-wood timber trees on a $23-million, 20,000-hectare plantation near Pyongyang. Other dealings with the Communist state include pharmaceutical and tourism projects.

Previous Singapore/DPRK posts can be found here.

Read the full story here:
S’pore toughens laws against trade with N Korea
Today Online
Esther NG
10/8/2010

According to the AP:

Ban Ki-moon told U.N. member nations in a report on North Korea’s human rights situation that rainfall in some areas of the country is expected to be 18 percent lower this year than in 2009, despite torrential downpours and flooding that hit the country’s west on Aug. 20.

U.N. agencies providing humanitarian assistance in the country are also increasingly faced with critical funding shortages, and have managed to provide only 20 percent of the $492 million required in 2009, he said. “This has led to a downsizing of operations, with several areas and some vulnerable groups no longer receiving international assistance,” Ban’s report said.

The Secretary-General wrote that reports from inside the country indicate that North Koreans continue to suffer from chronic food security, high malnutrition and severe economic problems.

e also urged nations to “encourage improvements in the human rights situation” inside North Korea.

The Secretary-General said the North Korean government also had the responsibility “to take immediate steps to ensure the enjoyment of the right to food, water, sanitation and health, and to allocate greater budgetary resources to that end.”

“Such persistent problems as widespread food shortages, a health care system in decline, lack of access to safe drinking water and deterioration in the quality of education are seriously hampering the fulfillment of basic human rights,” Ban wrote.

Ban said broad restrictions on civil and political rights, such as freedom of thought, religion, and expression continue to be imposed by the North Korean government on its citizens. “The government’s control over the flow of information is strict and pervasive,” his report said.

North Koreans found listening to broadcasts or disseminating information seen as opposing the government can be sentenced to up to two years in a “labor training camp,” or up to five years of “corrective labor” for more serious cases, it said.

The report said that although independent verification is impossible, there continue to be reports of public executions, political prisoners held under harsh conditions, and the use of torture, forced labor, and ill treatment of refugees or asylum-seekers repatriated from abroad.

Ban said that North Korea has rejected offers of technical assistance by the U.N. High Commissioner for Human Rights, and he urged the government to reconsider its position.

While serious concerns remain about political and civil rights in the insular nation, “I urge the international community not to constrain humanitarian aid on the basis of political and security concerns,” Ban wrote.

Read the full story here:
UN: Less rain, aid to hurt North Koreans
Associated Press
Anita Snow
10/29/2010

UPDATE 18 (11/08/2010): South Korean aid will finally be delivered to the DPRK on 11/09.  Here is more from the PRC’s People’s Daily:

Some of South Korea’s first government-financed rice aid in almost three years will be delivered to the flood-hit Democratic People’s Republic of Korea ( DPRK) starting Tuesday, the unification ministry said Monday.

Some of the 5,000 tons of rice currently in the Chinese city of Dandong will be sent to the northwestern DPRK city of Sinuiju, a city reeling from heavy rains in August, and the delivery will be completed by the end of next week, according to the ministry.

Three million cups of instant noodles, also part of the flood aid, have already been sent to Sinuiju, while some of the pledged one million tons of cement will reach the city later in the day, the ministry said.

As he took office in 2008, South Korean President Lee Myung-bak cut a free flow of rice aid to Pyongyang, which once amounted to 300,000 to 400,000 tons each year. A hard-liner toward Pyongyang, he also ended a decade of rapprochement under his liberal predecessors by linking aid to dismantlement of the DPRK’s nuclear programs.

UPDATE 17 (1o/29/2010): Here and here are photos of the aid arriving in China. 

UPDATE 16: According to the Korea Times, the shipment was delayed due to weather.

UPDATE 15: First aid shipment to go today (10/25).  According to Yonhap:

A shipment of rice was to depart a South Korean port en route to North Korea Monday, which will mark Seoul’s first government-financed rice aid to the communist nation in more than two and a half years.

A cargo ship carrying 5,000 tons of rice was scheduled to depart the port city of Gunsan for the northeastern Chinese city of Dandong on the border with North Korea. Another ship was also set to head from the port of Incheon to the Chinese city, carrying 3 million packs of instant noodles.

The Red Cross aid, which is aimed at helping the North cope with the aftermath of floods, marks South Korea’s first government-funded provision of rice to the North since President Lee Myung-bak took office in early 2008 on a pledge to link aid to progress in efforts to end Pyongyang’s nuclear programs.

Seoul also plans to send a shipment of 10,000 tons of cement to the North later this week.

A total of 13.9 billion won (US$12.3 million) came from the government coffers to finance the flood aid.

Also Monday, three Red Cross officials prepared to fly to the Chinese city to receive the rice and instant noodles there and transport the relief supplies by truck to the flood-hit North Korean border city of Sinuiju, according to officials from the Red Cross and the Unification Ministry.

The cargo ships are expected to arrive in Dandong around Wednesday.

Rice will be delivered in five-kilogram packages, and each package is marked with “Donation from the Republic of Korea,” South Korea’s official name.

In August, South Korea first offered to provide relief aid to the North after devastating floods hit the communist nation. North Korea later asked for rice, heavy construction equipment and materials.

UPDATE 14: S. Korea to send rice aid to N. Korea next month.  Accrording to Yonhap:

South Korea’s Red Cross will begin the shipment of 5,000 tons of rice and other aid materials next month to North Korea, which has been battered by summer floods, officials here said Sunday.

It would mark South Korea’s first government-funded provision of rice to the hunger-stricken communist neighbor since the conservative president, Lee Myung-bak, took office in early 2008 on a pledge to link inter-Korean ties to Pyongyang’s denuclearization.

The South’s government plans to convene a committee on inter-Korean exchanges on Tuesday to approve the use of taxpayers’ money earmarked for projects to improve relations with the North, the officials said.

“(The government) will report to the National Assembly on Sept. 28 and the committee will approve the aid worth 8 billion won (US$6.9 million) from the South-North Cooperation Fund (on the same day),” a Unification Ministry official said.

The rice shipment will depart from the port of Incheon, west of Seoul, on Oct. 25 and it will be delivered to the North Korean city of Sinuiju bordering China via Dandong, an adjacent Chinese town, he added.

Other aid items to be sent to the North in stages include 10,000 tons of cement, three million packs of instant noodles and some medical goods.

South Korea has ruled out the shipment of construction equipment, which the North requested, taking into account the possibility of the equipment being used for military purposes.

Seoul’s rice aid, although officials here stressed it is purely a humanitarian move, has been seen as a possible sign of a thaw in chilled inter-Korean relations. Military tensions have risen sharply since the sinking of a South Korean warship in March, which the South attributed to a North Korean torpedo attack.

South Korea suspended an annual shipment of 300,000-400,000 tons of rice to the North in 2008, citing little progress in efforts to end the North’s nuclear program.

UPDATE 13: Incheon Gov’t, Civic Group Sign MOU on NK Aid.  According to KBS:

The Incheon city government has signed a memorandum of understanding with a civic group to send 700 tons of corn to North Korean flood victims in Sinuiju.

The aid is worth 300 million won.

The city government and the Korean Sharing Movement obtained permission to provide the food aid from the Unification Ministry on September 14th.

The first shipment of corn will arrive late this month via an overland route linking the city of Dandong in China to the North Korean city of Sinuiju.

The remaining food aid will be delivered to North Korea by year’s end.

Previously, the Incheon city government announced a plan to send six shipments of milk and infant formula by December. The aid is valued at 100 million won.

The first shipment left Incheon port for North Korea on Saturday.

UPDATE 12: First shipment of aid has headed north.  According to the New York Times:

The nine trucks in the convoy carried 203 tons of rice that civic groups and opposition political parties in South Korea had donated for the victims of recent flooding in North Korea. The flooding is expected to worsen food shortages in the North, which even in a year of good harvests, cannot produce enough to feed its estimated population of 23 million people properly.

The shipment, coming just before the Korean harvest festival of Chuseok next week, also seemed to symbolize a newfound South Korean good will toward the North. It followed 530 tons of flour that a South Korean provincial government and civic groups sent on Thursday.

After President Lee Myung-bak came to power in Seoul in early 2008, South Korea had been reluctant to provide rice or any other major aid shipments to the North until its government in Pyongyang took significant steps to give up its nuclear weapons. The sinking of the warship, the Cheonan, further soured relations.

But in the past week, the South approved the civic groups’ donations, as well as a separate Red Cross plan to send 5,000 tons of rice. The approval followed conciliatory gestures by North Korea, including a plan to resume a Red Cross program of arranging temporary unions of families split by the 1950-53 Korean War.

The nine trucks in the convoy carried 203 tons of rice that civic groups and opposition political parties in South Korea had donated for the victims of recent flooding in North Korea. The flooding is expected to worsen food shortages in the North, which even in a year of good harvests, cannot produce enough to feed its estimated population of 23 million people properly.

The shipment, coming just before the Korean harvest festival of Chuseok next week, also seemed to symbolize a newfound South Korean good will toward the North. It followed 530 tons of flour that a South Korean provincial government and civic groups sent on Thursday.

After President Lee Myung-bak came to power in Seoul in early 2008, South Korea had been reluctant to provide rice or any other major aid shipments to the North until its government in Pyongyang took significant steps to give up its nuclear weapons. The sinking of the warship, the Cheonan, further soured relations.

But in the past week, the South approved the civic groups’ donations, as well as a separate Red Cross plan to send 5,000 tons of rice. The approval followed conciliatory gestures by North Korea, including a plan to resume a Red Cross program of arranging temporary unions of families split by the 1950-53 Korean War.

UPDATE 11: North Korea complains that it did not receive enough aid from South Korea.  According to UPI:

North Korea complained Sunday that a planned shipment of flood-relief aid from South Korea is much smaller than expected.

The state-controlled weekly Tongil Sinbo said the rice shipment the South Korean Red Cross said would feed 200,000 people for 50 days was not nearly adequate.

“After the lid was removed from the box of aid, there was only 5,000 tons of rice in it,” Tongil Sinbo said in a posting on the North’s official Web site.

The statement, which was monitored by South Korea’s Yonhap news agency, said the shipment would not last “even for a day.”

The Red Cross aid package, which includes rice and cement, was consigned to Sinuiju, a town near the Chinese border in a region hit hard by rain and flooding last month.

The shipment had been seen by diplomatic analysts as an easing of tensions between the two Koreas, Yonhap said. North Korea relies heavily on donations of rice and other supplies to prop up its economy.

Also, see this Yonhap story.

UPDATE 10: The Ministry of Unificaion is opposed to large scale food assistance—drawing a distinction between flood relief and large-scale food aid.  According to KBS:

Unification Minister Hyun In-taek says he is opposed to large-scale food aid to North Korea.

He said large-scale food aid is separate from humanitarian aid, and that all aspects of inter-Korean policy and the sinking of the “Cheonan” naval vessel should be considered.

Hyun made the remarks at a budget committee meeting on Friday when a main opposition Democratic Party member urged the government to send 500-thousand tons of rice to North Korea.

Hyun said that South Korea had sent large amounts of food aid on multiple previous occasions for what was called humanitarian assistance, but it is doubtful whether the rice had been distributed to people in need.

Adding to political pressure against further donations, the Choson Ilbo reports that the North Korean military is warehousing quite a bit of rice:

In a party caucus at the National Assembly on Thursday, Grand National Party floor leader Kim Moo-sung said calls for humanitarian food aid for the North are “inappropriate” at a time when the North “has as much as 1 million tons of rice in storage in preparation for war. We have to take this into consideration.”

The figure apparently comes from a report by the National Intelligence Service for the ruling-party leadership.

South Korea worries about a rice surplus when it stores only about 1.49 million tons this year. If it is true that the North is really holding back 1 million tons of rice for the military, it could have a profound effect on the ongoing debate over whether to increase aid for the North.

UPDATE 9: The first aid shipment has arrived.  According to Arirang News:

The first round of civilian emergency aid since recent flooding in North Korea was delivered to the border town of Gaeseong on Thursday.

The transport of 530 tons of flour on two dozen large trucks by Gyeonggi Province and non-governmental groups is also the first aid package from the South after it enforced punitive measures on Pyeonyang in May, in response to its sinking of the warship Cheonan.

And five South Korean personnel were permitted to cross the border to transfer the goods.

Kim Moon-soo, Governor Gyeonggi Province: “Many South Koreans have been wanting to provide assistance and there’s been a delay but we’re finally sending aid today. There are factors other than intent to consider.”

The group had been waiting since July for the government to give the green light to supply food aid worth about 240-thousand US dollars… enough to feed some 30-thousand children and other vulnerable groups for a month.

It is estimated that some 28 million square meters of agricultural land was swamped by rainfall of up to 324 milimeters in Gaeseong.

Kim Deog-ryong, Co-chair, Korean Council for Reconciliation & Cooperation: “Following the first round of aid, we plan to send additional second and third rounds in October. We hope nongovernmental efforts will eventually lead to continuous government-level assistance.”

The resumption of aid delivery to the North on humanitarian grounds will likely be succeeded by a series of foodstuffs, such as rice and corn, being transported through the Dorasan Customs, Immigration and Quarantine office, on top of the South Korean Red Cross’ pledged shipments of rice, cement and other supplies.

On Friday, more civilian aid consisting of 203 tons of rice is scheduled to be delivered to the flood-ravaged Shinuiju region.

Choi You-sun (reporter) “The South Korean government is maintaining a firm stance concerning its set of stringent measures against North Korea. But officials here say there are more applicants wishing to send provisions forecasting that there will be a significant increase in the amount of nongovernmental aid to the impoverished North.

UPDATE 8: The Ministry of Unification seems to have approved the private aid donations mentioned in UPDATE 7.  According to the AFP:

South Korea’s government said Wednesday it has approved a plan by local groups to send flood relief aid to North Korea, amid growing signs of a thaw after months of tension on the peninsula.

The Unification Ministry said it approved Tuesday requests to send emergency supplies worth a total of 2.24 billion won (1.2 million dollars) including 203 tons of rice.

The aid for flood victims in Sinuiju and Kaesong also includes flour, bread, blankets and instant noodles, said spokesman Chun Hae-Sung, adding the first shipment of 400 tons of flour would be sent Thursday.

It was the second time this week that Seoul groups have announced help following floods that hit the city of Sinuiju on the China border and the town of Kaesong, just north of the inter-Korean frontier.

UPDATE 7: In addition to the aid offernd by the South Korean government (in the posts below),  private organizations in South Korea are offering flood assistance.  According to Yonhap:

The Korea Sharing Movement and the Join Together Society (JTS) plan to ship 400 tons of flour to the North Korean border city of Kaesong via an overland route on Thursday, an official said. The Gyeonggi provincial government helped fund the assistance.

Separately, the Korean Council for Reconciliation and Cooperation, a coalition of pro-unification civic and social groups, also plans to send 130 tons of flour to the North on Thursday.

And in another Yonhap story:

An umbrella trade union said Wednesday it seeks to send about 100 tons of rice, possibly by land, to North Korea to help the flood-hit nation.

The Federation of Korean Trade Unions (FKTU), which claims up to 900,000 members across the country, said it is in talks with its North Korean counterpart to determine the exact delivery route and size of the aid.

UPDATE 6: The South Korean government is trying to figure out how to prevent aid from being diverted to the military.  According to the Choson Ilbo:

“Rice can be stored for a long time and is easy to divert to the military,” the official said. “But rice flour or noodles are harder to store for longer and are more likely to be given to the victims instead of being transported to military warehouses.”

The government offered the North 10,000 tons of corn following the reunion of separated families on the occasion of Chuseok or Korean Thanksgiving last year reportedly because this was less likely to be used for military rations. North Korean defectors say they were rarely given any rice supplied by the South, while rice bags with the lettering of the South Korean Red Cross stamped on were seen in military facilities close to the heavily armed border.

During the famine in the late 1990s, the North received corn flour aid from the U.S which the authorities then distributed through ration stations, a defector recalls.

But processing over 100,000 tons of rice into flour and other products may not be realistic as it would cost a lot of time and money, a Unification Ministry official said.

UPDATE 5: According to the Donga Ilbo:

Yoo Chong-ha, head of the (South) Korean National Red Cross, said in a news conference Monday that the Red Cross will send 10 billion won (8.6 million U.S. dollars) worth of aid comprising 5,000 tons of rice, 10,000 tons of cement, three million packages of instant noodles, and medicine.

He also suggested a working-level meeting of Red Cross organizations from both sides in Kaesong Friday on Pyongyang’s proposal for reunions of separate inter-Korean families.

On the volume of rice aid, Yoo said, “Around 80,000 to 90,000 people in (the North Korean city of) Shinuiju are known to be displaced, and 5,000 tons of rice can feed 100,000 people for 100 days,” translating into 500 grams a day per person.

The South’s Red Cross said it set the amount given that international aid organizations allocate 300 to 500 grams per person when they send rice assistance to the North.

The budget for buying the rice was 7.7 billion won (6.6 million dollars), or 1.54 million won (1,330 dollars) per ton based on the price of rice Seoul purchased in 2007.

Even if the South Korean government provides rice aid to the North, the combined amount will be around 10 billion won as the South’s Red Cross proposed to the North last month.

Excluded from the aid package was heavy equipment that the North requested. Most of the 10 billion won in aid will come from a South Korean government fund for inter-Korean cooperation.

UPDATE 4: And the picture becomes clearer.  According to the Guardian:

The $8.5m (£5.5m) package, to be funded by the government, is the south’s first aid shipment to its neighbour since the sinking of a warship in March reduced bilateral relations to their lowest point for years. Seoul says its vessel was sunk by a North Korean torpedo, a claim Pyongyang denies.

The countries may also resume reunions for families separated by the 1950-53 Korean war, which ended in an uneasy armistice but no peace treaty. The reunions were suspended after a South Korean woman was shot dead by a guard during a visit to the North Korean tourist resort of Mount Kumgang, in 2008.

UPDATE 3: Some specifics come out.  According to Yonhap:

S. Korea’s Red Cross announces 5,000 tons of rice aid for N. Korea’s flood victims

UPDATE 2: South Korean farmers demand ROK government send aid to DPRK to keep rice prices high.  According to the AFP:

Thousands of South Korean farmers rallied Friday, demanding the government stop a fall in rice prices by shipping surplus stocks in state silos to North Korea.

The farmers urged President Lee Myung-Bak to resume an annual shipment of 400,000 tonnes of rice to the North, which suffers severe food shortages. The shipment was suspended in 2008 as relations soured.

About 3,000 farmers took part in morning rallies in a dozen cities and counties, said the Korea Peasants’ League, which represents farmers, adding more were under way or planned in the afternoon.

“Resuming rice aid to North Korea is a short cut to stabilising rice prices and also improving inter-Korean ties,” league spokesman Kang Suk-Chan told AFP.

The government makes an annual purchase of rice from farmers to stabilise prices amid falling national demand, but is predicting a bumper harvest this year.

Unless some stocks are sold off, the agriculture ministry says the South’s strategic rice reserve will soon reach an all-time high of 1.49 million tons, twice the 720,000 tonnes considered necessary for emergencies.

Last week minister Yoo Jeong-Bok said the government would sell about 500,000 tons of the reserve this year to companies that make alcoholic beverages and processed food ingredients.

Farmers claimed the ministry’s move would fail to stop the fall in prices. They want the government to lift the 2008 ban and to purchase this year’s harvest at higher prices.

Subsidised farmers grow more rice than South Koreans want to eat. The country’s consumption of the staple fell in 2007 to its lowest level for decades as people ate more meat and vegetables.

Cross-border tensions this summer have run high over the sinking of a South Korean warship with the loss of 46 sailors. The North vehemently denies involvement but the South has cut off most cross-border trade.

Read the full story here:
S.Korea farmers demand rice shipment to N.Korea
AFP
9/10/2010

UPDATE 1: The DPRK accepts the ROK’s aid offer.  According to the BBC:

North Korea has responded to an offer from South Korea of emergency food and medical aid, saying it would prefer to receive rice and building materials.

The South Korean offer, worth more than $8m (£5m), was made last week after severe flooding in the North.

South Korea says it is considering the North’s request.

The aid would be the first large-scale shipment since South Korea blamed its impoverished northern neighbour for sinking one of its warships in March.

South Korea blames Pyongyang for sinking the Cheonan with a torpedo, killing 46 crew.

North Korea denies any role in the incident and has demanded its own investigation.

Food aid

North Korea’s Red Cross said it would prefer rice, cement and heavy construction equipment – items it said were necessary for flood recovery efforts, according to Seoul’s Unification Ministry and Red Cross.

The South’s offer excluded rice – a staple which Seoul has stopped sending to Pyongyang amid strained relations.

North Korea has been hard hit by floods caused by heavy rains in July and August, especially in its northern areas bordering China.

This week a South Korean newspaper published pictures of people sleeping in tents and queuing for water in the city of Shinuiju.

They were taken by an undercover source who also reports rare public complaints that the North Korean leadership is not doing enough to help.

Read the full story here:
North Korea accepts flood aid offer from South
BBC
9/7/2010

ORIGINAL POST: South Korea offers flood aid to the DPRK. According to the BBC:

South Korea has made its first offer of aid to North Korea since it accused Pyongyang of sinking one of its warships in March.

South Korea’s Red Cross has offered 10bn won ($8.3m, £5.3m) worth of flood aid to its impoverished neighbour.

The offer came hours after the United States imposed new sanctions on the North in response to the sinking.

South Korea blames North Korea for sinking the Cheonan on 26 March with a torpedo, killing 46 crew.

North Korea denies any role in the incident and has demanded its own investigation.

FOOD AID
North Korea has relied on food aid from China, South Korea and aid agencies to feed millions of its people since a famine in the 1990s resulted in the deaths of hundreds of thousands.

But the communist country has been hard hit by floods caused by heavy rains in July and August, especially in its northern areas, bordering China.

“The aid includes medical kits, emergency food and supplies,” a Unification Ministry official said, quoting the Red Cross message sent to North Korea.

The offer has yet to be accepted by the North.

Under President Lee Myung-bak, the South has stepped back from its earlier “sunshine” policy of unconditional aid and has linked the provision of aid to progress from the North on ending its nuclear programme.

A South Korean offer of about 10,000 tonnes of corn to North Korea in October 2009 was the first official aid to its hungry neighbour for almost two years.

The year before, the South had offered 50,000 tons of corn but the North rejected the shipment amid high tensions.

‘TOO EARLY’
The offer came after North Korea reportedly indicated it was ready to return to six-party talks over ending its nuclear ambitions.

Parts of North Korea have been badly affected by severe flooding Leader Kim Jong-il told the Chinese president that he wanted to see negotiations resumed during a visit to China last week, Chinese state media said.

The talks – which involve the two Koreas, China, Russia, Japan and the US – have been stalled since December 2008 over Pyongyang’s missile and nuclear tests.

But South Korea is demanding an apology for the warship sinking before any return to the negotiations.

Japan also says the time is not right to resume talks.

On Tuesday its foreign minister, Katsuya Okada, told China’s visiting nuclear envoy, Wu Dawei, that it was still “too early” to think about a return to talks.

On Monday the US imposed additional sanctions on North Korea, targeting trade in arms, luxury goods and narcotics.

Read the full story here:
South Korea offers aid to flooded North
BBC
8/31/2010

(via One Free Korea) Global Times reports (in Korean) that the DPRK is leasing two islands (황금평 and 위화도) to China.

Here is a satellite image of the two islands (highlighted):

According to the article:

South Korea’s Hankook Ilbo daily newspaper reported Thursday that North Korea has decided to extend the lease terms of two islands to Chinese companies for the establishment of a free trade zone.

However, analysts say the zone will more likely be developed as a trade area to facilitate business with China.

Both islands are located on the Yalu River, which constitutes the northwestern boundary between North Korea and the northeast region of China.

Hankook Ilbo reported that North Korean leader Kim Jong-il agreed to establish a free trade zone of 50 square kilometers on the two islands during his visit to China in May, and foreigners won’t need a visa to visit the islands.

The extension of the lease term by 100 years – starting this past May – to Chinese companies is unusual because Pyongyang generally leases land to foreign companies for 50 years, the report said.

By press time, state-run media in North Korea hadn’t confirmed the report.

South Korea’s Yonhap News Agency reported earlier this year that in order to attract foreign investment to North Korea, Pyongyang will set up a free trade area, located near the Sino-North Korean border city of Dandong, Liaoning Province, to be developed by a Chi-nese enterprise.

The report quoted an informed source as saying the scale of investment in the two islands will total $800 million.

“I don’t think North Korea will establish a free trade zone in the border areas that soon,” said Lü Chao, director of the Korean Research Center at China’s Liaoning Academy of Social Sciences. “But it is likely that the two islands will be developed into a border trade zone that can help improve the lives of the locals and be conducive to regional stability.”

Lü told the Global Times that developing a free trade zone in North Korea’s border areas with China might take longer.

Separately, Japan’s Yomiuri Shimbun newspaper reported Monday that Kim Jong-un, the third son of Kim Jong-il, recently said his country needs food more than bullets.

“In the past, it was all right to have bullets and no food, but now we must have food, even though we don’t have bullets,” the newspaper quoted him as saying.

The paper said Kim Jong-un made the remarks during a visit to Kimchaek city in Ham-gyong Province in late September, and the comments are confirmed in documents recently disseminated to party officials.

Kim Jong-un was promoted to a four-star general and vice chairman of the ruling Workers’ Party’s Central Military Commission last month during an important meeting of the party.

The White House said Thursday that North Korea appeared to be in the early stages of a leadership transition, and it would still take some time to discern the final outcome.

“We’re watching the transition closely,” Jeff Bader, US President Barack Obama’s Asia adviser, told reporters.

The idea of building a special economic zone near Sinuiju has been proposed several times but it never seems to take hold.  Given the level of economic growth in Dandong over the last five years, and China’s growing clout in the DPRK, maybe things will be different this time.

Read the full aticle here:
NK leases islands to Beijing: report
Global Times
Wang Zhaokun
10/29/2010

Accordign to Yonhap:

South Korea’s Red Cross is pushing to set up its own communications channel with its North Korean counterpart so that it can carry out humanitarian missions independent of cross-border political tensions, the organization’s chief said Thursday.

“We’re talking with the government on the need to work with the North Korean Red Cross through an independent means of communication,” Yoo Chong-ha, president of the Korean National Red Cross, said in an interview with Yonhap News Agency.

“Government-level dialogue is between governments. The role of the Red Cross has to be separate,” Yoo said.

The Red Cross, although tasked with non-political projects such as relief aid and family reunions, has at times served as an alternative track for contact and talks between the two Koreas, who are technically still at war after the 1950-53 Korean War ended in a truce.

“The Red Cross is not a subsidiary agency to the Unification Ministry. It is not appropriate for all concerned that the Red Cross should work on behalf of the government,” Yoo said in the interview. The chief will be heading to the North to oversee a round of family reunions that begin on Friday.

Currently, there is no channel linking the Red Cross chapters of the two Koreas. Their sole hotline at the truce village of Panmunjom was severed as part of Seoul’s package of punitive measures announced in May after holding the North responsible for the deadly sinking of a warship that killed 46 sailors.

Yoo said he would tell his North Korean counterpart, Jang Jae-on, of the importance of resuming humanitarian exchanges, regardless of political tensions, when he visits North Korea.

In Red Cross talks this week that reopened for the first time in a year, the North asked Seoul to provide tens of thousands of tons in rice and fertilizer aid in exchange for expanding family reunions.

“This is not an issue for the Red Cross” to deal with, said Yoo, with skepticism on whether such aid draws results.

Read the full story here:
S. Korean Red Cross seeks independent communications channel with Northern counterpart
Yonhap
10/28/2010

According to China Economic Review:

Could North Korea be saved by Chinese-style reforms? In return for its continued support, China is pushing the rogue state to liberalise its economy, and Chinese firms are making inroads into various sectors, especially infrastructure and mining. Earlier this week, I interviewed Felix Abt, a Swiss business consultant who was appointed managing director of a pharmaceutical joint venture in Pyongyang with a brief to turn around the loss-making company, about his experiences over the last eight years.

How open is North Korea to foreign investment, and how many foreign companies are operating on the ground?

In 1992 the Supreme People’s Assembly adopted three laws allowing and regulating foreign investment — the Foreign Investment Law, the Foreign Enterprise Law, and the Joint Venture Law.

Since then, foreign investors have become active in a variety of industrial and service industries. There are a few hundred foreign-invested companies operating at present, mainly smaller sized ventures ($100,000 to $3 million) and of Asian origin (with China ranking No.1).

There are a few very large foreign investments, mainly in the telecom and cement industries. Western multinationals have been shying away from North Korea for fear of ending up on a sanctions list in the world’s largest economy. BAT sold its highly profitable tobacco factory due to political pressure in Great Britain to a Singaporean company a few years ago.

What sort of person sets up business in North Korea? What sort of industries have arrived and what sectors are not represented?

The domestic market is still very small and limited and and not much growth can be expected in the foreseeable future. So to talk about a promising emerging market at present would be a silly exaggeration.

However, North Korea is a very interesting location for the processing of products from garments to shoes to bags where you send the cloth or the leather and the accessories and they send you the finished products back.

The same goes for the extraction of minerals and metals, abundantly available in North Korea, in which case you would send equipment and get the mining products.

In addition, the manufacturing of low to medium technology items is very competitive and such products are already being made with foreign investment in North Korea from artificial flowers to furniture to artificial teeth. I was involved in making the business plan for the artificial teeth joint venture and know therefore that such products can be manufactured with a much better profit margin than for example in the Philippines where the artificial teeth had been produced before.

A particularly promising industry is IT due to the extraordinary quantity and quality of mathematicians unmatched by other countries. The first and only software JV, Nosotek, has seen remarkable successes within a very short time from its foundation and could become a subject of interest to investors who would never have thought of putting any money in North Korea until now.

How easy is it to do business there? Are most foreigners concentrated in Pyongyang or are they spread around?

It depends on the expectations, on the choice of the local partner and on the expatriate staff a company sends there. You need to thorougly select the most suitable local partner and an expatriate manager that is not only professionally competent but also can adapt to and cope with a demanding business environment.

The success of the pharmaceutical joint venture I was running in the past depended on a fast capacity building of the Korean members of the board of directors, managers and staff. I brought them to China where they visited the first foreign and Chinese invested pharmaceutical JV and I convinced its Chinese octogenarian architect to become a member of our company’s board of directors.

Since he faced very similar problems decades earlier he could convince the North Koreans quite easily why certain things had to be done in a certain way to make the business successful. We visited a great number of pharmaceutical companies, wholesalers, pharmacy chains in China and some of our staff even worked in a Chinese factory for some time.

When I wanted to set up the marketing and sales function I was first told that “companies in the DPRK usually don’t have a sales dept.”. I was asked to send a letter to the cabinet to explain my reasons to get the permit for doing so. The visits in China were surely important eye openers and helped getting things organised like in any other country.

The Korean managers and staff quickly acquired all the necessary skills and were able to run the day to day business (factory, import and wholesale of pharmaceuticals, pharmacies) alone when my term ended as managing director.

Many foreign business people are based in Pyongyang, but there are also many working in different places throughout the country, e.g. near mines in the mountains.

Hu Jintao has urged North Korea to speed up its economic reform, using China as a model. Could North Korea open up in the same way over the next few years?

The Chinese are better informed than the scholar and North Korea expert who recently wrote in the Wall Street Journal that the country’s elite would never agree to reform its economy as they fear the system would then collapse.

Together with the Chinese, I believe the risk of a collapse is much bigger if no reforms are carried out than if there are slow and controlled changes.

Once the economy starts taking off and people’s living standards rise the people will hardly challenge the system and the leadership even though the North Korean people know that South Korea’s economy is much more advanced.

Read the full story here:
Can North Korea embrace Chinese-style reforms?
China Economic Review
Malcolm Moore
9/23/2010