North Korean Economy Watch

From the BBC:
9/5/2002

North Korea has announced that it will open up its companies to more foreign investment, as part of a new policy to liberalise its economy.

The Korea Trade-Investment Promotion Agency (Kotra) said that it would now allow foreign investors to take stakes in Korean companies of more than 50%.

“In the case of joint ventures, foreign companies could take only up to 50% of stake in the past, but now there is no problem if their stake goes above the level,” Kotra said, quoting North Korea’s vice trade minister Kim Yong-sul.

The country is hoping that the rule change will encourage Japanese and South Korean businesses to take a greater stake in the North Korean economy.

Economic sea-change

In the past few months, North Korea has devalued its currency and abolished a convertible version of the won used in transactions with foreigners.

The country has also raised prices and wages, and placed more emphasis upon companies being profitable.

Changes to the foreign ownership rules were explained at a conference in Tokyo, which was attended by about 50 Japanese businessmen.

“The measure is an effort by Pyongyang to expand trade and business with other countries,” Kim Sang-shik, a Kotra official, said.

He added that North Korea had attracted $120m (£76.7m) of foreign investment to a special trade zone at the end of 2000 – more recent figures were unavailable.

Socialist profits

The new economic policies aim to wean factories and companies in North Korea off state subsidies and become self-sustained.

North Korea’s planned economy has been in place since the communist state came into being in 1947.

People in the country have been afflicted by droughts and numerous natural disasters, acerbated by an inefficient economy.

The economy grew by 3.7% in 2001, after a 1.4% expansion the previous year, according to estimates from the Bank of Korea – the South Korean central bank.

Following the ownership rule change, Kotra said it expected more South Korean companies to take stakes in companies across the border.

Trade between the two neighbouring countries increased by 8.9% year-on-year to $215m in the first half of this year.

Plans to build railway and road links between the two Koreas were agreed last month.

BBC
8/30/2002

The two Koreas have agreed to begin work on restoring road and rail links across their troubled border.

The agreement, which followed two days of economic talks in Seoul, is the latest sign that the secretive North is determined to end its diplomatic isolation.

The North has also agreed to receive Japanese Prime Minister Junichiro Koizumi for an historic visit in September.

The two countries have no diplomatic relations and no Japanese prime minister has ever visited.

Mr Koizumi was due to spend one day in the North on 17 September and hold talks with its leader Kim Jong-il.

“I want to discuss directly with him the possibility of restarting efforts to normalize our relations,” Mr Koizumi said.

Japan and South Korea’s eagerness to engage with North Korea appeared to sit at odds with American wariness towards the communist state.

On Thursday, a senior US diplomat warned that North Korea was the world’s leading exporter of ballistic missile technology and repeated President George W Bush’s assertion that it forms part of an “axis of evil”.

Mr Koizumi said he had discussed the visit with both US President George W Bush and South Korean President Kim Dae-jung. A Japanese official said the visit had been under discussion for more than a year.

North-South progress

According to the South Korean version of a joint statement issued on Friday, both sides had agreed to reconnect one railway line by the end of this year and construct a second by early next year.

Importantly, the two sides’ militaries will hold talks before work begins on 18 September.

The 4-kilometer-wide (2.5-mile-wide) demilitarized zone is heavily mined. Military co-operation is seen as a pre-requisite for the transport links, which have been cut since the end of the 1950-53 Korean War, to be restored safely.

South Korea said it had agreed to send 400,000 tonnes and 100,000 tonnes of fertiliser to North Korea on credit as soon as possible.

The North’s command economy has been unable to feed its people for several years and there have been widespread reports of famine.

Mr Koizumi’s proposed visit to North Korea was apparently raised at talks in Pyongyang this week between Japanese and North Korean officials.

Japan and North Korea relations are often tense, especially over Japanese allegations that some of its nationals were kidnapped to train North Korean spies.

From The Economist
June 17th, 2000

About 100,000 northerners are believed to have crossed into north-eastern China, where some 2m ethnic Koreans have lived alongside the Chinese since the mid-1800s. Recently, the numbers crossing the river have slowed down, partly, it is thought, because the famine in North Korea has eased. But the North Korean guards have also doubled the bribe they demand from those they let pass.

Some people return home after scavenging for food, but many remain, hoping to better their lives or to escape persecution. They face a perilous existence, in constant fear of being caught and deported. It is from these refugees that a picture of the grim existence of North Koreans emerges. They also give a glimpse of the extent of the opposition to Kim Jong Il’s rule.

That opposition is feeble. Some of it comes from Christian groups, especially those established by South Korean missionaries who look after some of the refugees. A mission in Yanji, for instance, helps to care for 100 or so North Korean children and 50 adults. Missionaries say they convert about one in five to Christianity and some are then sent back to North Korea to spread the word.

There are said to be about 50 underground churches in North Korea, usually houses where people go to pray and read the Bible in secret. Although there is little sign of it yet, some people think that the Christians could one day openly stand up for their rights, as the Falun Gong movement has in China.

Other refugees seem more determined to overthrow rather than challenge the North’s leaders. A group of armed North Korean soldiers sneaked into China in May to join a resistance group hiding in the mountains, according to one missionary. This, he claims, has made China strengthen its frontier controls.

A North Korean academic, who came to China two years ago to carry out a survey of the refugees, says he decided not to return home: after experiencing life in China and learning about South Korea, he felt betrayed by the North’s regime. Now he says he is determined to help overthrow it.

Some people talk of attempted coups. One is supposed to have been staged by the 6th Army Corps in the north-east of the country in January 1996, but was quickly put down. Officers were executed and the unit has since been dissolved, recalls a former lieutenant in a North Korean special-forces unit who crossed the Tumen river with his wife and son three years ago.

A woman who fled a year ago says one of the North’s big problems is a lack of food-processing skills. Only when she came to China did she realise that canned fish could be sold for more money than raw fish. She plans to use this valuable piece of capitalist knowledge if warmer relations ever allow her to go home.

BBC
6/13/2000

South Korean President Kim Dae-jung’s emotional plea for solidarity ahead of the unprecedented summit with North Korean leader Kim Jong-il —–

“Honourable citizens of Pyongyang and North Korea, I am truly glad to meet you. I came here because I wanted to meet you.

“I came here because I wanted to see the mountains and rivers of the North that I have yearned to see even [in] my dreams. It has been too long. I have finally come after going around and about over that long period of time.

“It was not just once or twice that I plunged into deep despair thinking that I would never be able to step on the soil of the North in my lifetime. But now, I have attained my lifelong wish.

“The 70 million Korean people in the South and North are also ardently hoping to attain their wish as soon as possible.

‘Just a beginning’

“More than anything, I wholeheartedly thank Chairman Kim Jong-il for inviting me and my delegation. I also thank all of you who are welcoming us so warmly like this. And I convey warm greetings from your compatriots in the South.

“As president of the South, I came to Pyongyang to lead the effort for peace, co-operation and unification in accordance with the will of your compatriots in the South.

“I believe the expectations which our compatriots in the North have in the summit between Chairman Kim Jong-il and I are as great as those of your compatriots in the South.

“This is just a beginning. Since the inter-Korean summit, which was just a dream, is now reality, we will solve problems one at a time.

Bitterness

“Together with Chairman Kim Jong-il, I will give my all in searching for ways for all Koreans in the South and North to live peacefully and lead a better life.

“Honourable citizens of Pyongyang and North Korea, we will not be able to resolve all at once the bitterness that has accumulated over the past half century.

“But well begun is half done. I wholeheartedly hope that all the Korean people will have hopes for reconciliation, co-operation and peaceful unification on account of my visit to Pyongyang.

“We will do our utmost to resolve the problems that can be solved one at a time.

‘I love you’

“We will surely solve those issues which we do not solve this time by meeting for a second and third time.

“I hope that the citizens of Pyongyang and North Korea will give Chairman Kim Jong-il and me strong support and encouragement.

“Compatriots in the North, we are one people. We share the same fate. Let us hold hands firmly. I love you all. Thank you.”