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World Food Program-DPRK aid plan announced

Friday, March 3rd, 2006

From the Seoul Times:

WFP’s governing Executive Board has approved a two-year plan to build on the agency’s ten-year record of humanitarian assistance to the Democratic People’s Republic of Korea by tackling nutritional deficiencies and chronic hunger.

Valued at US$102 million and requiring 150,000 metric tons of commodities for 1.9 million North Koreans, the plan aims to provide vitamin-and-mineral enriched foods produced in-country to young children and women of child-bearing age, and cereal rations to underemployed communities to build and rehabilitate agricultural and other community assets.

Several members of the Executive Board expressed strong concerns about the restrictions on monitoring and access that the DPRK government has imposed. These include a reduction in the number of international staff from a peak of 46 to just 10, and a reduction in the number of monitoring visits from approximately 400 per month to a much more limited number.

“We now look to the government of the DPRK to agree to conditions that will allow us to do our work properly, for the sake of the people who need our help.” “If we cannot reach a suitable final agreement on our operating conditions, we will be forced to withdraw,” Morris told the Executive Board members.

Past WFP operations mobilised more than four million tonnes of commodities valued at US$1.7 billion, supported up to one-third of the population of 23 million, and contributed to a significant reduction in malnutrition rates.

While in years past WFP’s resources were spread across all accessible counties – 160 out of 203 for much of 2005 – the new operation envisages a more focused approach, with 80 percent of the food going to the 50 most vulnerable counties.

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Price and wage data:

Wednesday, February 15th, 2006

Daily DK did a survey of prices in the DPRK this January, 2006.

Official Wages for a North Korean workers labor are 2,000 won to 3,000 won per month (about $1).

 

Exchange rate

Yuan 350:1 / Dollar 2,715:1 / 100Dollars: 85Euro

Groceries

Rice

750won

Millet

500won

Glutinous

850won

Barley

450won

Annam rice

700won

Pork

3,000won

Chicken

3,000~4,000won(it depends on size)

Egg

150won per one

Edible oil

Yellow-1,930won per kg

Seasoning

1,500won per 500g

White – 1,660won

Corn

380won

 

Clothes and Shoes

Underwear

panties

500~1,000won

Sneakers

Home handcraft

6,000won

Brassiere

4,000~5,000won

Private products

3,000won

Socks

500~1,000won

Made in China

12,000~17,000won

Shoes

15,000~20,000won

Handy shoes(for women)

2,000won

 

Housing Prices

Rental

60won per menth / Paying quarterly

Luxurious apatment

4,000~5,000dollars(99m²)

Quality apartment

3,000dollars(82.5m²)

General apartment

1,500~2,000dollars(66m²)

Small apartment

1,000~1,500dollars(49.5m²)

General single story house

800dollars

Inferior single story house

450~500dollars

 

Medicines

Cold remedy

20won(1pill)

Vitamin B1 injection

20won(once)

Aspirin

20won(1pill)

Amoxicillin (Antibiotics)

28won(250mm)

Anthelmintics

60won(1pill)

Santonin

120won (1pack)

Obstruent

15won(1pill)

Painkillers

15won(1pill)

– When examined, bribery is not necessary
– When getting a medical certificate or medicines, bribery is necessary
– Bribery: one box of tobacco/ as for medicines for 1,000 won, 7000 won

Stationery

Pencil

General lead pencil

25won

Notebook

Big one

25won

Mechanical pencil

200won

Small one

15won

Ball pen

50~100won

School Uniform

Elementary school

1,500won

School Bag

10,000won

Mid and High schools

2,500won

– Every month, the following costs should be paid to schools: kindergartens – 1,000 won/ elementary schools- 2,5000 won/ middle and high schools- 4,000 won
– Every month, the following stuffs should be provided to schools: scrap irons, glass 15kg and 40 bundles of timbers
– In an irregular basis, the following stuffs should be provided to school: vinyl, wastepaper, paints and gasoline

Railroad Fares

Shinuiju – Pyongyang

High class – 650won

Shinuiju – Chongjin

1,000won

Low class – 450won

Shinuiju – Gaesung

1,000won

Shinuiju – Nampo

600won

Shinuiju – Ryongcheon

200won

Sariwon – Pyongyang

200won (low class)

Pyongyang – Dandong(Pyongyang-Beijing international train)

About 10yuan(3,300won)

Dandong – Pyongyang

400yuan

 

Fares of Cars and Buses

Shinuiju – Pyongsung

8,000won

Shinuiju – Jeongju

5,000won

Shinuiju – Yeomju

3,000won

Shinuiju – Wonsan

10,000won

Sariwon – Wonsan

8,000~10,000won

Sariwon – Pyongyang

1,000won

Sariwon – Pyongsung

8,000~10,000won

Sariwon – Haeju

6,000won

 

Accommodation Fee

Hotels

Usually 100 dollars, at minimum 60 dollars

Inns

50~100won

Private-owned inns

Less than 100~200 won / The most decent room is 500won

 

Fees for Travel Documents

Safeguard certificate

in a province

3,000won

Crossing-river certificate

100dollars

Outside of a province

4,000~5,000won

Passport and visa

40,000won

 

Selling Stand in a Market

Depending on size, place and kinds of business

15,000~50,000won

 

 

Appliances

White-black TV

50,000~60,000won

Computer

Pentium 3

170~190dollars

Color TV

200,000won(new one)

Pentium 4

300~400dollars

Radio

Made in China – 20,000~30,000won(about 100yuan)

 

Prices and Phone Bills of Telephone and Mobile Phone

Telephone

Installation fee(per one)

40,000won(about $200)

Using in a postal office

Local

2won

Rental per month

1,500won

distance

40~50won
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Posted in Agriculture, Finance, General markets (FMR: Farmers Market), Labor conditions/wages, Price liberalization, UN World Food Program | Comments Closed

North Korean Grain production up 5.3% in 2005

Wednesday, January 25th, 2006

According to Financial Express:

North Korea’s grain production rose 5.3 per cent to 4.54 million tonnes in 2005, helped by better harvests and fertilizer shipments from South Korea, South Korean data showed today.

The 2005 harvest was still far short of the impoverished country’s annual demand, estimated at six million tonnes, South Korea’s unification ministry said in a report. North Korea received 500,000 tonnes of rice from South Korea last year, together with humanitarian food aid from the World Food Programme (WFP) and other international agencies.

UN’s food aid to North Korea, however, ended on December 31 after Pyongyang said it no longer needed emergency shipments from international agencies.  Instead, Pyongyang called for long-term development assistance to end its chronic food shortages. But some experts regard the shift to development-oriented assistance as a tactic to dodge the WFP’s request for transparency in food distribution. 

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what is stopping DPRK reform?

Wednesday, January 18th, 2006

According to Han Young Jin, Reporter, Defector from Pyongyang
in the Daily NK:

Interview 1:
Kang Min Jun (pseudonym, age 65), a former executive of “Keumgang Jewelry Processing Co.”, a North Korea-China state cooperative factory asserted that Kim Jong Il’s visit to China is a mere gesture.

“I participated in the National Economic Sector Officials Seminar held in Pyongyang, and it was before the 2002 7.1 Economic Measure was announced. The central party officials who came to educate us said, “Reformation and liberalization does not fit into our revolution reality so do not expect it to happen.” Unless the North Korean regimes changes, reformation and liberalization will remain as a dream,” Kang said.

“After his 2001 visit to China, Kim Jong Il praised China’s changes calling it, “heaven and earth reversed” and called on three hundred professors and experts from Pyongyang People’s Economy University and Wonsan Economics University and made them visit China and study economics. They came back and during their discussion for reformation, their study was abandoned due to the four principles the Party insisted never to be violated.”

The four principles Kang presented are as the following.
1.  Planned economy must never be abandoned.
2.  Private ownership by the people cannot be permitted.
3.  Liberalization of individual economy must not be allowed.
4.  The Public Distribution System (food distribution system) must not be abandoned.

Interview 2:
“Whenever he is in trouble, Kim Jong Il makes an event. Right now, Kim Jong Il is in a deep trouble. Nuclear issue, counterfeit issue, Banco Delta Asia fund freeze, human rights issue, food issue and all the problems are now come together. The only way to solve these problems is siding with China. If North Korea is determined to reform, it could be have just made foreign investment attraction policy instead of making a trip all the way to China.”

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Posted in Economic reform, Foreign direct investment, Private property, Public Distribiution System (PDS), UN World Food Program | Comments Closed

Price information

Saturday, December 31st, 2005

Here is more commodity price information courtesy of Open Radio for North Korea:

Agricultural and houselhold commodities:
1) Rice
-Shin Eui Joo: The price rose from 850 won/kg (18th) to 900won/kg (31st)/ whole sale price: 620won/kg
-Bak Chun Gun: October: 1000won/kg, November 800won/kg (trading rice was banned in October with resumption of food distribution system, which caused the rising price.)
-Pyeongyang: Honammi 800won/kg Annammi 680won/kg

2) Corn
-Shin Eui Joo: 400won/kg (December)
-Bak Chun Gun: 350won/kg (November)

3) Pork
-Shin Eui Joo: 3,300won/kg (December)
-Bak Chun Gun: 3,500won/kg (November)

4) Beef: 7,000won/kg (Beef is seldom sold at markets, but was temporarily out in the black market for new year’s holiday season.)

5) Cooking Oil
-Shin Eui Joo: 2,300 won/kg (November)/Yellow Oil 
-Bak Chun Gun: 2,500won/kg (November)/Yellow Oil

6) Seasoning
-Same in the region of Shin Eui Joo, Sah Ree Won, Bak Chun Gun: 2000won/bag(200g)

7) Underwear
-Bak Chun Gun: Brassiere: 4,000~6,000won, Children’s underwear: 5,000~6,000won
-Shin Eui Joo : Underclothes: 10,000~15,000won/piece, 20,000~30,000won/set

8) Socks
-Bak Chun Gun: 500~2,000won/pair (socks for winter)

9) Shoes
– Bak Chun Gun: high quality: 15,000won, poor quality: 3,000~4,000won/ Handmade: 2,500won 

10) T.V
-Shin Eui Joo: the same as November

11) Price of house and rent
-Shin Eui Joo: One storied house (1 Room, 1 Kitchen): $600, Apartment (2 Rooms, 1 Kitchen): $1,500, Well-located apartment (3 Rooms, 1 Kitchen): $10,000~15,000(able to bargain), 100 Sq.m- apartment: $12,500 (90,000~100,000 Chinese Yuan)
-Sa Ree Won: 100 Sq.m apartment $8,750 (70,000 Chinese Yuan)
-Bak Chun Gun: One storied house (2 Rooms, 1 Kitchen): around $100, Three storied apartment: around $150~200

Footnotes:
1.  A middleman receives 10% of the purchase as compensation. If one moves to a purchased house, one needs to receive a certificate which records that you are allowed to live in the house from a police officer in charge of registration in the neighborhood, usually the payment is one mal(10du/15kg) of rice.
2.  Expense for making Kimchi(Bak Chun Gun): Chinese cabbage 200won/head, Red pepper powder 2500won/kg, garlic 3,000won/100heads, ginger 300won/kg, salt 350won/kg, sugar 1,000won/kg, salted anchovies 1,500won/kg, scallion is raised at home.  Approximately 40,000~45,000won is expended for making 150 heads of Kimchi (usually consumed with rice, and is made with pepper, scallion and salted anchovies), for family of four.

Local Fees and Markets:
1) Electricity- Bak Chun Gun: 10won/lightbulb, 70won for black and white TV (per quarter)

2) Water- Bak Chun Gun: flat rate of 200won per house (per quarter)

3) Tax on land – Bak Chun Gun: 200won/2.5 Sq.m (per month)

4) Payment for spot at markets (Bak Chun Gun)

5) Exchange rate for Renminbi and US dollar
Shin Eui Joo: 2,900won/$ (November 1: 2,715)/ Rinminbi 360won/yuan (November 1:320)/ 3600won/Euro

Footnotes:
1.  No payment at markets, but general tax is imposed. 20won/day for agricultural products, and tax for industrial products vary according to the goods.
2.  Spots in Markets are rarely traded. For people starting their business at the market, relationship with the manager is important. When business with the manager was successful, managers make a spot for them by making others’ spots smaller.

Health Care and clothing:
1) Medicine for cold and antibiotics (Bak Chun Gun)
-Medicine for cold: Chung Yeong Poong 10won/pill (Adults consume 2 pills)/ Antibiotics: Penicillin 100won per ampoule/ Distilled water: 30won
-Antibiotics: when one receives an injection of 1 ampoule of Penicillin mixed with distilled water, the doctor is paid 100won aside from the price of medicine.

2) Bribe paid for medical examination and basic treatment (Bak Chun Gun)
-5000won for releasing a medical certificate, 350won for 1 injection (ex, glucose 500g), 100won for Penicillin

3) Stationaries (Bak Chun Gun)
-Won Joo Pil( Ball Pen): 250won, Notebook (paper made of straw): 5won/20pieces, Hand-made bag in North Korea, 2,000~3,000won, Uniforms used to be purchased at a flat rate set by the government with a coupon, but uniform is seldom sold at a shop these days. People usually purchase fabrics of appropriate color and size, and hand made the uniforms. (official state rate for elementary school uniform used to be 1,500won)

Monthly tuition and expense (Bak Chun Gun) :
-No monthly tuition is officially required, but some parents give some money to the teachers privately and school requires the students to prepare various materials.
– Club activity: the students need to pay 5,000won every month. (If one participates in cell activity, he/she is exempted from external labor or social labor ).
– Monthly payment is 10 bundles of firewood/Iron 3kg/Vinyl 1kg/Rubber 1kg
– -Students who fail to bring the materials are returned home without being allowed into the class.

Electricity:
-Shin Eui Joo: same as November
-Bak Chun Gun: Electricity was provided throughtout all day despite frequent blackouts occurred in the summer. / Since the beginning of the winter, electricity was provided only between 10:30pm~ 4am due to poor supply. (Mostly, candles are used at night. Candles are 40won each).
–  Pyeongyang: electricity is provided for 24 hours, but blackouts occur often. Sometimes, 3~4 hours of blackout occur. 

Water Supply:
-In case of Bak Chun Gun downtown, water pipes freeze in the winter. People dig wells for water.
-In case of Pyongyang, peripheral area is provided with water only once or twice a week. (The time when water is supplied is not announced beforehand. People have to watch the faucet on all the time).

Railway system and transportation fee:
-The fare for train from Bak Chun~ Won San with a transfer at Gaema Highland (Where Pyong Buk Sun and Gang Won Sun meets) is 35won, but most of the officials at the station hide the tickets and sell them for 1,000won.
-In order to buy train tickets, one needs to make a reservation a day ahead and stand in line to buy the ticket on the day. However, honored soldiers, soldiers on service and school teachers have priority, and it is hard for common people to buy tickets.
-What is interesting is that a lot of people take the train without paying the fare when moving from Bak Chun Gun to Ahn Joo Gun by Shin Eui Joo-Gae Sung train. It is because no body checks the tickets in this block.

Cars, buses and car fare between major cities:
-Pyongyang: same fare of 5won for subway, train without track
-Bus between Bak Chun ~ Shin Eui Joo runs once a day, and the fare is 2,500~2,800won. Additional 1,000won needs to be paid for one luggage.
-Shin Eui Joo~Nampo/ Roundtrip, once a day, 10,000won
-Shin Eui Joo~Won San/ Roundtrip, once a day/ 12,000won (10,000won possible after bargaining)
-Shin Eui Joo~Sa Ree Won/ Roundtrip, once a day/ 12,000won (10,000won possible after bargaining)
Footnote: No departure time is designated. The train leaves when the train is full.

Lodging:
-Shin Eui Joo: Same as before. Some of the private inns are as well organized as hotel. Chinese Koreans usually use them, and it costs 5,000won per night.
-Bak Chun Gun: State owned inns lacked heating system and was filled with lice, which is why they rarely exist now. Individuals run lodging facilities now (similar to lodging at a private residence)/ they come out to the station in order to invite guests, and it costs 100won per night.

Expense for obtaining travel document:
-Travel document: it costs 10,000won to travel from Bak Chun to Pyeongyang (ten box of cigarettes branded “Cat”)/ if using other ways, 6,000won~8,000won (Jagangdo 7,000won/Chungjin 8,000won/Pyeongsung 6,000won)/ 500won from Bakchun to Shin Eui Joo (Within a province)
-Travel document is not supposed to cost any money, but Municipal adminisrative committee, county administrative committee and officials in charge of the process publicly asks for money/ Only expense for travel documents to Pyongyang is flat rate of 10,000won, and expense for other provinces differ by person.
-Travel document to cross the river: Valid for one month, and cannot be extended/ costs around $100~200, which is not much more than passport or visa. (more money paid, the document is more quickly issued)/ Fee for travel document to cross the river is set for 20,000won by the government.
-When Chinese citizen visited North Korea with the document, extension is only available with a cost of $100 a day. (When one has good relationship with people of National Security Agency or any other relevant organizations, he/she can pay $50 a day) Because of the fee, they rarely extend the document.
-Passport and visa: DPRK passport is valid for 2 months and Chinese visa is valid for 90 days (In North Korea, expiration date on DPRK passport is more important than that on Chinese visa)/ Extension can be made twice, but extension is rarely requested by anyone (Specific reason for extension needs to be provided, which is a lot of work)/ Also, certificate of health is only valid for 4 months, which means that the passport cannot be extended twice/ fee for issuance of passport is set by the government for 40,000won (Some people say 150,000won). But actual expense is $100~500, and the expense varies depending on the region, person (interpersonal skills, ability, relationship with others) and the waiting time to get the passport (1 month~1year)/ Passport is issued in 1~2 months with a payment of $500 for Pyongyang, and 2~3months with a payment of $300 for other regions. / DPRK passport is valid for 2 months, but it is actually issued 1 month after the issue date.
-When visiting China to visit relatives, applicants for passport and travel document to cross the river are classified separately. In case of crossing Yalu River, if the applicant intends to stay in Dandong Province (Dandong, Bongsung, Donggang, Gwanjun) they need to apply for travel document, and if they intends to go farther than Dandong Province and for example, visit relatives in Shenyang and Fushun, they need to apply for passport.
-A case of procedure to obtain travel documents to cross the river and visa (with purpose of visiting the relatives)
-Application and procedure -> Mid March, Fill out the application (Hand $200 to officials at the office of foreign works: Confirmation of the relatives at the office of foreign works, military security office, and military police office, confirmation by a chair of women’s committee, Approval from Provincial Police Office and National Security Agency) -> Issuance of travel documents to cross the river in the beginning of November -> Two-day education in the beginning of November (First day: Exhibition on battle against espionage/ Second day: special education by the deputy of military security offic / Lastly, write out the oath) -> entered China on 23 November

Price of a business spot at the market (Bak Chun Gun)
-In case of the market at Bak Chung Eup, they don’t have the price of business spots.

Food Distribution System
-Bak Chun Gun: Distribution was carried out twice in the beginning and the end of October/ Distribution was halted in November/ The amount distributed was 15kg and did not meet the assigned amount of 57kg/ Official amount: 700g for workers, 300g for housewives, 500g for 15 year old child, 400g for 13 year old child/ rice/other crops ratio is 3:7
-Pyongyang: Food distribution was not halted except for the three months period of April~June 2005./ The amount distributed is 485g(official: 700g) for workers, 300g for housewives, 200g for students (official amount 300~500g)/ ratio of rice and other crops was 5:5. The ratio was sometimes 7:3 when things are better than the usual/ The price was 36won for Annammi, 54won for Honam rice (received from South Korea)/ Price at Yangjungso(Place where rice is gathered) was 20won less than market price/ Everyone is supposed to purchase rice from Yangjungso, but because of poor quality of rice, some well-off people buy rice at market.
-Shin Eui Joo and Sa Ree Won is similar to Bak Chun Gun.

Events, accidents, things to pay attention to

1) Penalty for listening to foreign broadcasting or watching illegal recordings
Case1> There was a public trial and punishment in July~August 2004 for 5 people for watching illegal recordings at a conference room of Gun Management Committee of Bak Chun Gun, located in downtown. / The penalty was expulsion of the family of the involved party to the mountains.
Case 2> A person who sold and showed VCD in Pyongyang in November 2005 was arrested. During investigation, the person committed suicide using a string on his bag while the investigator was absent. Reason for the suicide was not to harm the rest of his/her family/In Pyongyang as well, when one gets caught while watching illegal recordings, the penalty is usually an expulsion.

2) Wire telephone and charge for phone calls
– Installation of wire telephone: $200 at Sa Ree Won and Bak Chun Eup, $300 at Shin Eui Joo for obtaining a phone number as well/ customer needs to purchase the wire separately
-User of private wire telephone: There are relatively a lot of users of private wire telephone at Bak Chun Eup because there are a lot of Returnees from Japan and traders. Among 120 households, there are 11 households with telephone./ When somebody want to use wire telephone in a neighborhood, around 500won is paid.
-Common people use telegram for communication. 10won is charged for one page, and .5won is charged for each additional word.

3) Others
-Bak Chun Gun: There was a rumor that private cultivation would be allowed starting from this year, but instead of private cultivation, a group farming was adopted. Each group pay the assigned amount to the government, and the rest was left for the individuals to take care of. However, the groups needed to take care of fertilizer and pesticides which caused decline of the yield/ Phrase including “Communism” is gradually decreasing (example, “Communist Ethics” was replaced with “Socialist Ethics” in textbooks for elementary, middle and high school. “Rice is Communism” was replaced with “Rice is Socialism” as well/General atmosphere is that people do not believe what government and the party says.

-Pyongyang: Broadcasting criticized the resolution on situation of human rights in DPRK at the UN, but it is heard that the criticism has caused side effects/ Many of the people think that the resolution must have been adopted because there is a problem of human rights in DPRK/People in Pyongyang are known to be unhappy with Kim’s regime but have no way to change it. So they try to be patient and endure.

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Posted in Agriculture, China, Communications, Emigration, Energy, General markets (FMR: Farmers Market), Hoteling, Price liberalization, Public Distribiution System (PDS), Transportation, UN World Food Program | Comments Closed

Is the DPRK tightening its grip or reforming?

Thursday, December 22nd, 2005

A writer with the Institute for Internaitonal Economics has published an oped in the Herald Tribune on December 22, 2005:

Here is the Summary:

  • Economy collapsed in 1990s with weather, end of Soviet aid, and bad policy
  • 1995, DPRK asks for help..WFP feeds b/n 1/4 and 1/3 of population
  • as the state was unable to feed the people, bottom-up marketization grew
  • Now there is a revival of the PDS and controls on travel (which were suspended during the famine)
  • Grains can no longer be sold at market, and supplies are being seized
  • This incentivises farmers to harvest early, hoarding and running secret plots
  • A revival of the failed socialist model would not only mark a U-turn in North Korea’s reforms, but would also set the stage for a recurrence of humanitarian problems in the future.
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Banking steps towards the real world

Monday, December 12th, 2005

FDI Magazine
Stephen Timewell
12/12/2005

On my journey to Pyongyang a Beijing receptionist remarked that the Democratic People’s Republic of Korea (DPRK) is very much like China was 25 years ago. And as the motorcade of China’s president Hu Jintao passed thousands of flower-waving North Koreans on his visit to the world’s most secretive and politically isolated country at the end of October, he may well have agreed.

Visiting Pyongyang is like going back decades in a time machine, to a land with no advertising, no Nokia, Microsoft or McDonald’s billboards and almost no cars. Impressive grand avenues and massive public monuments dominate the landscape but there is no new construction or shops.

The streets are scrubbed clean by hand and are full of hundreds of orderly people wearing their ‘Great Leader’ badges and walking everywhere. Curiously, bicycles are discouraged because of bad accidents and the government encourages power walking for good health, or so I am told. In a country said to spend 30% of its GDP on defence, there is no visual military presence (or overt police presence) in the capital at all.

The ‘traffic ladies’ standing at major intersections are a welcome replacement for traffic lights but there are precious few cars to direct.

Questions greatly outnumber answers in this capital where visitors are duly dazzled by the spectacular grand mass gymnastics and artistic performance (called Arirang) by almost 70,000 children in the massive 150,000-seat May Day Stadium. But visitors are also aware of serious food shortages and cannot ignore the capital’s tallest building, a magnificent 105-floor pyramid tower with a crane on top, left unfinished many years ago, I was informed, due to financial problems.

Winds of change

Whether the DPRK is seen as the last Stalinist communist state or as a Confucian nationalist monarchy or even, as it describes itself, as a “powerful socialist nation”, visitors can feel the winds of change, particularly on the economic front. For more than 50 years the iconic stature of the late ‘Great Leader’ Kim Il Sung and that of his successor son Kim Jong Il have dominated the political landscape; the question going forward is how the country’s dire economic circumstances can be improved and whether the regime has the capability to create the new structures needed.

Pyongyang was playing host not only to Mr Hu but also to an increasing number of foreign delegations and journalists, all keen to understand the trends taking place in probably the last country to have massive pictures of Marx and Lenin hanging outside its Ministry of Trade. For many, however, the current focus is progress in the Six-Party Talks on the nuclear weapons programmes of the DPRK.

In the fourth round of talks in September between the two Koreas, China, Japan, Russia and the US a landmark agreement appeared to have been reached. “All six parties emphasised that to realise the inspectable non-nuclearisation of the Korean Peninsula is the target of the Six-Party Talks,” a joint statement said. “The DPRK promised to drop all nuclear weapons and current nuclear programmes and to get back to the non-proliferation treaty as soon as possible and to accept inspections from the International Atomic Energy Agency.”

At the time of going to press in November a fifth round of talks was expected to move a final agreement closer but detailed negotiations over implementation of the above agreement were not expected to be easy or to be concluded quickly. The DPRK, unsurprisingly, wants some payback, be it light-water reactors from the US or other economic incentives.

The core issue is that the DPRK’s publicly acknowledged plutonium programme, believed to provide enough radioactive material for about six bombs, is probably also the country’s key card in trying to rebuild the economy. Kim Jong Il needs to gain maximum advantage from giving up his nuclear threat, but even then, what does his economy have to offer?

Information hollow

For a financial journalist the DPRK represents a serious challenge. Understanding the economy and the banking sector of a country is never easy, but when no data is published by the government or the central bank it becomes significantly more difficult. I knew information was scarce but believed that the two very agreeable government minders, assigned to monitor my every move in my four-day visit, would be able to help me extract a simple list of banks operating in the country. No such luck. Although my visit was welcomed, the central bank (which acts as both the issuing bank and as a fully operational commercial bank in the traditional socialist model) failed to provide the list (or anything else), despite numerous requests.

Although the consensus after several interviews was that around 20 banks of various types exist, I can only vouch for the handful listed here. Clearly the Foreign Trade Bank (FTB) represents a pivotal bank in the financial system and Ko Chol Man, director of the FTB, was keen to explain the peculiarities of the DPRK banking system. “The domestic and foreign exchange settlement systems are completely separate. The central bank deals with the domestic market and money issuance and it also has a commercial banking role; the FTB has complete control over foreign exchange matters and trade and also holds the country’s foreign exchange reserves.”

Unlike other banking systems, the FTB in the DPRK acts as a clearing house for the foreign exchange activities of the banks in the country. It does not report to the central bank but, like all banks, reports to the State Fiscal and Financial Committee (SFFC), the overall banking regulator.

Mr Ko was pleased to note that the FTB had around 500 correspondent banks worldwide and, along with its 600 staff (including 11 branches) in North Korea, had six representative offices outside the country (including offices in Austria, Russia and China) and planned to establish a UK representative office in London. However, when asked for details of FTB’s banking activities he replied bluntly that no banking institution had published its figures in terms of activities or balance sheet. “We cannot give figures about the size of our assets because it is a regulation of the state. If the situation becomes better we can make them public but up to now it is impossible.”

Economic estimates

Despite the absence of official economic and banking data, various estimates help make the picture a little less murky. A recent Standard Chartered Bank report places North Korea’s nominal GDP at the end of 2004 at $22bn or $957 in GDP per capita terms for the country’s 23 million population; by comparison, South Korea’s nominal GDP is put at $680bn or $14,167 per capita for its 48 million population. While the unification of the two Koreas is seen as an important political objective, especially in Pyongyang, the startling economic gap between the two states could mean that the North becomes a huge burden on the South, and Seoul well recognises the economic problems that emerged from the reunification of Germany in the 1990s.

Meanwhile, Jong Msong Pil, of the Institute of Economy at the Academy of Social Science, explained how the economy had declined dramatically from a GDP per capita of $2500 in the mid-1980s to $480 per capita in 2000.

“The big drop was caused by the disappearance of the socialist market worldwide in the early 1990s; the collapse of our socialist barter trade system led to the failure of many enterprises and a decline in living standards,” he said.

Dr Jong noted that, following the hard times of the mid-1990s, the first target of the national economy has been self-reliance. He added that no economic data had been published since 2000. He believed, however, that 10% economic growth occurred in 2004 and, responding to reports from the World Food Programme (WFP) that a third of the population were malnourished, he said the food situation was improving. “In our country, all people have a job so for this reason no one has died of starvation or hunger. Our country is a socialist planned economy so the government takes care of people’s living.”

Acknowledging shortages in the past, Dr Jong said that in October the government had normalised the public food distribution system, which indicated the government was now supplying sufficient food.

Is the DPRK’s food crisis over? Driving around Pyongyang’s spacious avenues (with two minders) there was no visual evidence of malnutrition – but the capital is likely to be much better served than elsewhere. A supermarket was shown but the goods were only available for foreign currency, hardly food for the masses. Cha Yong Sik, deputy director general at the Ministry of Foreign Trade, said the government had not imported food on a commercial basis in 2005, unlike previous years, but neighbouring countries are still providing significant food aid. Richard Ragan, country director of the WFP, said food production in 2005 was up 10%, with cereals up 6.6%. But while the food situation may have improved, the DPRK is said to be still dependent on food aid.

Trade predictions

So what are the DPRK’s prospects? Much depends on the outcome of the nuclear negotiations but estimates from the Seoul-based Korea Trade-Investment Promotion Agency (KOTRA) say the DPRK’s trade volume in 2005 is expected to pass $3bn for the first time since the fall of the Soviet Union with the figure likely to reach $4bn if inter-Korean trade is included. Trade with China, the DPRK’s largest trading partner, grew by more than 40% in the first half of 2005, indicating Pyongyang’s growing dependency on Beijing.

Upbeat on trade prospects, Mr Cha explained that the recently opened Tae-an Friendship Glass Factory, built with a $32m donation from the Chinese government, would export 40% of its 300-ton capacity, mainly to Siberia. Also Pyongyang’s first autumn international trade exhibition in October included companies from six European countries, the focus being on the country’s mineral potential rather than its manufacturing abilities, which are a long way off.

As for banks, the group of up to 15 joint venture banks are helping to finance the country’s 150 or so international companies. But do not expect miracles. The latest, Koryo Global Credit Bank, set up in June, is a joint venture between the UK-based Global Group, headed by Hong Kong businessman Johnny Hon, with 70%, and the state-owned Koryo Bank with 30%. Established with a paid-up capital of e10m, KGC Bank is ambitious in its plans to engage the DPRK in trade and commercial relations with the rest of the world, especially Asia, the Middle East and Europe.

KGCB’s first correspondent banking relationship in Europe is with Germany’s Helababank. The bank, the first product of cooperation in the finance field between the DPRK and the UK, has a staff of five and is also interested in investing in property. It was also able to produce, at the instigation of US authorities, a comprehensive anti-money laundering file.

Another local venture is North East Asia Bank (NEAB), which was set up by ING Group in 1995 but is now wholly owned by the Korean BOHOM Group. Amazingly, Kim Hyon Il, NEAB’s president, produced a balance sheet showing total assets of e79m at the end of 2004 and a paid-up capital of e25m. He also showed me the bank’s newest product, a chip-based cash/debit card, the first in the DPRK. The card demonstrates perhaps that the country is slowly joining the real world – but with only 100 issued and only 13 outlets available, the service has a long way to go.

Political effects
 
At Daedong Credit Bank, chief executive Nigel Cowie explained how international politics can have a dramatic impact on banking even in the isolated DPRK. In September, just before the conclusion of the fourth round of the Six-Party Talks, the US Treasury accused Banco Delta Asia (BDA), a Macao-based bank, of aiding the DPRK in a series of ‘money laundering’ cases. The Wall Street Journal had said the Macao crackdown was Washington’s method of cutting off Pyongyang’s financial sources for its nuclear weapons programme.

Mr Cowie, a former HSBC banker, explained that all DPRK banks had accounts with BDA for the purposes of remitting funds and, as a result, the accounts were suspended pending an inquiry in mid-November. While Stanley Au, chairman of BDA’s parent, denied the US allegations and BDA’s involvement in any illegal business relations with DPRK banks, the damage is done. “It affects our customers because it affects people’s ability to remit money to and from the country. I imagine that this will cause people doing legitimate business to give up,” says Mr Cowie.

The nuclear negotiations remain critical to the country’s future and the Chinese, in particular, want them to succeed. But that is just a start. There is evidence that the DPRK is opening up and changing with reports that there are 300 open markets operating across the country, 30 in Pyongyang. But whether the DPRK follows the China model of 25 years ago and can restructure its ‘powerful socialist nation’ doctrine remains doubtful under the current leadership.

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Posted in 1990s Famine, Agriculture, Banking, Central Bank, China, Daedong Credit Bank, Fiscal & monetary policy, Foreign Trade Bank, GDP statistics, General markets (FMR: Farmers Market), Institute of Economy, Koryo Bank, Mass games, Ministry of Foreign Trade, North East Asia Bank (NEAB), Public Distribiution System (PDS), State Academy of Sciences, State Fiscal and Financial Committee, Statistics, Trade Statistics, UN World Food Program | Comments Closed

Rallying round to boost Korean harvest

Friday, October 28th, 2005

BBC
Andrew Harding
10/28/2005

It was early on Sunday morning, but Roh Buk-chong, a 39-year-old postman, was already striding down the road leading north from Pyongyang.

“I am a volunteer,” he said. “I am going to help the farmers with the harvest – full of patriotic enthusiasm.”

He was not alone. In a scene strangely reminiscent of a 1950s Soviet propaganda film, the road was clogged with pedestrians and cyclists, heading for the nearby rice fields in the bright sunshine.

A government van passed by with loudspeakers on the roof, playing a rousing tune.

“They call me the girl who works well,” went the lyrics. “They call me the girl who works faster than the fastest horse.”

All this is part of what observers say is a concerted push by North Korea’s isolated regime to boost domestic food production, in a country where a third of the population is chronically malnourished.

It may be working. According to some predictions, this year’s harvest will be 10% larger than in 2004.

But that will not be enough, warned the UN World Food Programme’s country director, Richard Ragan.

“North Korea is chronically food insecure, so it’s unlikely in the near term that it will ever produce enough food,” he said.

Aid withdrawal

For the past decade, international food aid has helped bridge the gap for millions of North Koreans, many of whom starved to death during a famine in the mid-1990s.

The WFP now has 19 food processing plants in the country, helping to feed 6.5 million people.

It is backed up by a team of foreign monitors, who keep track of malnutrition rates.

But all that is about to change. North Korea’s heavily politicised drive for a bigger domestic harvest has been coupled with a new and more controversial move to end international food aid, and restrict the number of foreign aid workers in the country.

Although the details are being negotiated, all the WFP’s food plants are due to close within the next month.

“North Koreans are proud people,” said Mr Ragan. “They don’t want to create a culture of dependency, which makes a lot of sense.

“But there are still real humanitarian needs here, and it remains to be seen now they deal with them.”

Some aid is expected to continue in the form of development assistance next year.

China and South Korea are also likely to help make up any shortfall in food supplies.

But North Korea’s most vulnerable groups are now facing a period of uncertainty.

A key concern is how food will be distributed, and whether the army’s needs will be put ahead of the rest of the population.

High inflation recently prompted the authorities to abandon a market system for grain distribution, in favour of the old state-controlled policy – which the WFP has described as “inoperable”.

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Posted in Agriculture, Civil society, Foreign aid statistics, International Aid, Public Distribiution System (PDS), UN World Food Program | Comments Closed

North Korea Reinstates Controls on Grain Sales

Monday, October 3rd, 2005

Los Angeles Times
Barbara Demick
10/3/2005

North Korea Reinstates Controls on Grain Sales Rice and other foods will be distributed by the government and banned at markets.

Rolling back some of its economic reforms, North Korea is banning the sale of rice and other grains at private markets and strengthening its old communist-style public distribution system under which all citizens are supposed to get rations, aid groups and North Korea experts say.

The changes were supposed to be implemented Oct. 10, a holiday in North Korea marking the 60th anniversary of the ruling Workers’ Party. But reports from the World Food Program office in Pyongyang, the capital, indicate that merchants have been told already that they can no longer sell grain.

The United Nations agency said in a statement on its website that “as of Oct. 1, reports are that cereal sales in the markets will cease and public distribution centers will take over countrywide distribution.”

North Korea experts say the moves do not necessarily indicate an abrupt U-turn in the impoverished country’s economic policies, so much as concern that change was taking place too quickly.

“I think it is a transitional necessity. You can’t move too fast into free—market economics without softening the blow for people who have grown up in a planned economy,” Richard Ragan, who heads the World Food Program office in Pyongyang, said in a recent telephone interview. “This is not that different from what you saw happening in China in the 1990s.”

Lee Young Hwa, a Japan—based human rights worker who has close contacts with traders at the Chinese—North Korean border, believes the new restrictions on markets are designed to boost the power of the Workers’ Party and curb the role of the military in the economy.

“The military people control the food sold at the market. Nobody else has the trucks or the access to gasoline to move food around the country. The leadership fears that their economic reforms aren’t working because everything is controlled by the military, and they want to take back control,” Lee said.

For years, there have been accusations that the military was pilfering humanitarian shipments of rice and other aid, keeping the best for its own and selling the rest at markets. Secretly taped video footage obtained last year by human rights workers shows apparently unopened sacks of rice given by the U.S. and other donors being sold illegally at a market in the northern city of Chongjin.

On the open market, a pound of rice costs 15 to 25 cents — an impossible sum for many North Koreans, whose average salary of $1 per month keeps them on the verge of starvation.

Under the new rules, rice, as well as other staples such as corn, is to be sold at public distribution centers at subsidized prices and in rationed quantities. Markets, which have been gradually legalized since 2002, will still be permitted to sell vegetables, produce, clothing and other goods.

Cho Myong Chol, a former North Korean economist who lives in Seoul, said he believed North Korea would continue with market reforms but at a slower pace. “Since the economic reforms in 2002, the gap between the haves and the have—nots has become so extreme that there is an imbalance that is causing social unrest and dissatisfaction. I think they needed to do something about food to keep control.”

It remains to be seen whether the changes will help ordinary North Koreans. The government recently informed U.N. aid officials that it was cutting back their operations and no longer needed large donations of rice and other foodstuffs. Experts believe North Korea is concerned about the U.N. ‘s monitoring requirements and prefers direct aid from countries such as South Korea and China, which place fewer restrictions on donations.

Until the 1990s, the public distribution system introduced by North Korean founder Kim Ii Sung was the hallmark of a nation that claimed to provide its people with everything from rice to shoes. But the system collapsed in the early l990s, exacerbating a famine that killed an estimated 2 million people — about 10% of the population. The public distribution system still operates, but at reduced capacity.

Although North Koreans today buy much of what they need at markets, the government doesn’t like to admit it and insists that the cradle—to—grave system of social welfare remains.

“We are still a communist country. Nothing has changed. I get everything I need through the public distribution system,” said Yoon So Jung, 25, a guide interviewed last week at Mt. Kumgang, one of the few areas of the country open for tourism.

But pressed about her pink windbreaker, Yoon admitted hesitantly, “Well that, I bought at the market.”

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Posted in Black markets, Economic reform, General markets (FMR: Farmers Market), Military, Political economy, Price liberalization, Public Distribiution System (PDS), UN World Food Program, Worker's Party | Comments Closed

North Korea rejects UN food aid

Friday, September 23rd, 2005

BBC
9/23/2005

North Korea has formally told the UN it no longer needs food aid, despite reports of malnutrition in the country.

Deputy Foreign Minister Choe Su-hon said the country now had enough food, due to a good harvest, and accused the US of using aid as a political weapon.

Top UN relief co-ordinator Jan Egeland said an “abrupt” end to food aid would harm North Korea’s most vulnerable.

Pyongyang’s move comes as the world community continues to urge it to give up its nuclear ambitions.

Analysts say North Korea might be worried that accepting more food aid now could be perceived as a sign of weakness.

The North may also have lost patience with efforts by foreign agencies to monitor deliveries of food, according to the BBC’s Seoul correspondent, Charles Scanlon.

In recent years, the UN and other international agencies have been feeding up to six million of the poorest and most vulnerable North Koreans.

But these organisations have long struggled for access to one of the world’s most closed societies.

Even at the height of a famine in the mid-1990s, which may have killed two million people, they were tightly restricted and refused entry to large parts of the country.

Now the authorities are cracking down altogether, our correspondent says.

After meeting UN Secretary General Kofi Annan in New York on Thursday, Choe Su-hon told reporters: “We requested him to end humanitarian assistance by the end of this year.”

He said that the North wanted all foreign NGOs out by the end of the year, and added that the UN was to stop delivering food aid and to focus on long-term development instead.

Mr Egeland urged North Korea to reverse its decision, saying he was especially worried about the country’s children.

“Our concern is they (North Koreans) will not be able to have enough food. We are very concerned because we think this is too soon and too abrupt,” he said.

Gerald Bourke, a spokesman for the WFP, said that UN staff were currently discussing with the North Korean government what this meant in practice – adding that he was hopeful that current food-for-work and other community-based projects would class as longer-term development.

“We’re also talking to donors to see how much they still want to help us in this way,” he added.

Mr Bourke said that despite Mr Choe’s assertion of a better harvest in North Korea this year – and his pledge that the government was “prepared to provide the food to all our people” – there was still a considerable need for food aid.

“North Korea has a substantial and chronic food deficit,” Mr Bourke said, adding that malnutrition rates, especially for mothers and young children, were still very high.

Political issue?

Mr Choe also accused other countries, especially the US, of attempting to “politicize humanitarian assistance, linking it to the human rights issue”.

He said this constituted interference in the internal affairs of the country.

Washington rejected the suggestion it was mixing politics with relief work.

“All US decisions are based on… the need of the country involved, competing needs elsewhere and our ability to ensure that the aid gets to people who need it most,” a State Department statement said.

Another problem which analysts believe may have led to the North’s decision to ask foreign organisations to leave is the extensive surveying these groups are required to do, to ensure their money is being well-spent.

“Part of the problem is with our monitoring people moving around the country,” Mr Bourke conceded. “This is and has been a concern for them.”

In contrast, China and South Korea provide huge food shipments to North Korea without overseeing where it ends up.

The South says it gives such aid as part of a strategy to promote political reconciliation.

But diplomats and aid workers say these generous shipments have undermined the multilateral effect.

According to our correspondent, there is concern that if monitoring stops, so too will surveys to check the food gets to those most in need.

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Posted in Agriculture, International Aid, UN, UN World Food Program | Comments Closed

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