North Korean Economy Watch

UPDATE: A friend sent in a link to the video of the unveiling that appeared on North Korean television:

ORIGINAL POST:

Pictured above (Google Earth:  40.971557°, 126.588980°) the old Kim Il-sung statue in Kanggye, Jagang Province.

Satellite imagery is not recent enough to show the change, but KCNA reports that Kanggye City, the capital of Jagang Province, has received new statues of the deceased Kims:

Pyongyang, October 11 (KCNA) — Statues of President Kim Il Sung and leader Kim Jong Il were erected in Kanggye City, Jagang Province.

The statue of Kim Il Sung depicts him standing in his military uniform whose coat flying in the wind, his right hand held high and left hand taking a pair of binoculars. He seems to dynamically arouse the army and people of the DPRK to provide a turning-point in the Fatherland Liberation War. The statue of Kim Jong Il imposingly standing in his padded dress conveying so many stories about the Songun revolution depicts him with one of his hands placed on his waist. His face beaming with a broad smile looks as if he were wishing the great Paektusan power a rosy future.

An unveiling ceremony took place on Thursday.

Present there were Kim Yong Nam, Choe Yong Rim, Choe Ryong Hae, Kim Jong Gak, Kim Ki Nam, officials concerned, service personnel, officials and employees of the units who contributed to the erection of the statues, members of the shock brigades and people and school youth and children in the province.

The statues were unveiled by senior party, state and army officials and leading officials of the province.
A floral basket sent by the dear respected Kim Jong Un was laid before the statues.

Laid there then was a floral basket in the joint name of the Central Committee of the Worker’ Party of Korea, the Presidium of the Supreme People’s Assembly and the DPRK Cabinet.

Also placed there were a floral basket in the name of Jagang Province and floral baskets in the name of the party and power organs, bodies of different levels, enterprises, factories and farms, KPA units, etc. in Jagang Province.

All the participants paid tribute in profound reverence to the statues of Kim Il Sung and Kim Jong Il.

Kim Yong Nam, member of the Presidium of the Political Bureau of the Central Committee of the WPK and president of the Presidium of the SPA, made an unveiling speech.

He said the great Generalissimos paved the way of turning the province, which had been considered as unfit for human habitation, into a good place to live in and made sure that the province took the lead in the drive for building a thriving nation.

Recalling that it was the ardent desire of the people in the province to have statues of the great Generalissimos, he said the statues were erected in a brief span of time on the highest level thanks to their loyalty.

After being briefed on the statues, the participants looked round the statues.

A valued reader pointed out to me some some peculiar language (in the English version of the story). I point it out below:

He seems to dynamically arouse the army and people of the DPRK to provide a turning-point in the Fatherland Liberation War. The statue of Kim Jong Il imposingly standing in his padded dress conveying so many stories about the Songun revolution depicts him with one of his hands placed on his waist.

I have to laugh at the phrase “dynamically arouse”. Someday I will need to work that into a conversation.  And just what would you make of a statue of Kim jong-il “imposingly standing in his padded dress”? If only I was proficient with Photoshop…

This will be the 11th Kim Jong-il statue of which I am aware. At this point we can probably expect new Kim Il-sung and Kim Jong-il statues to go up in all of the provincial capitals.

All of these statues are constructed by the Mansudae Art Studio in Phyongchon, Pyongyang.

KCNA ran the following headline on 2012-10-2: “Statue of Generalissimo Kim Jong Il Erected at KPA Unit [10215]“.

According to Ken Gause, KPA Unit 10215 is the military cover designation of the 국가안전보위부 — the Ministry of State Security (MSS) [a.k.a. State Security Department (SSD), National Security Agency (NSA), State Political Security Department (SPSD)].

Checking the Google Earth imagery, we can in fact see the statue under construction at the MSS headquarters in front of the General Bureau Building.

Pictured above (Google Earth:  39.074311°, 125.767690°): Tarps covering the newly unveiled Kim Jong-il statue. Image date: 2012-6-20.

You can see a video of the unveiling on North Korean television below. This is the first time, of which I am aware, that the MSS headquarters has been shown on television:

(UPDATE) NK Leadership Watch also covered the unveiling and provides additional information.

In related news, the Kim Jong-il and Kim Il-sung statues on Mansu Hill have been covered up for renovations. In his latest at 38 North, Ruediger Frank also publishes a photo.

All images of the Kims are produced by the Mansudae Art Studio in Phyongchon District, Pyongyang.

Institute for Far Eastern Studies (IFES)
2012-7-27

The Beijing branch of the Joint Venture and Investment Committee of North Korea (JVIC), called the Choson Investment Office, announced on July 18 of various preferential conditions to foreign investors and employment conditions on its website.

The Choson Investment Office opened its doors this year and is the only overseas branch of the JVIC, in charge not only of securing foreign capital but cultural and science and technology exchanges and cooperation.

The website posted an article titled, “Problems Investors Face,” which provided useful information for foreign investors in a question and answer format.

In the article, the employment conditions for workers were included. The minimum monthly wage for workers in North Korea was set at 30 euros or about 42,000 KRW. In addition, foreign companies must pay 7 euros to each employee separately as social insurance. Overtime pay also needs to be paid and at the event of work related injuries or illness, the company is responsible for handling the situation with its board of directors.

In comparison, the minimum monthly wage for North Korean employees in the Kaesong Industrial Complex (KIC) is 110 USD or about 125,000 KRW.

As for preferential tax policies, foreign-capital companies that are not joint venture are exempt from certain taxes including tariffs on exports and resource tax for the development of mines.

North Korea will bear the land use tax, which is 1 euro per square meter, and China and other foreign investors will have no restriction for mining the underground resources.

The income tax rate for the foreign capital companies was specified at 25 percent and business tax between 2 to 10 percent will be collected from transportation, power, commerce, trade, finance, insurance, tourism, advertisement, hotel and entertainment industries.

Power is the main concern for most foreign companies and it will be provided at 0.053 euro per 1,000 kilowatt. The DPRK’s central trade guiding organ will oversee the setting of prices of goods while the trademark rights will belong to the company.

The DPRK’s Joint Venture and Investment Committee was expanded and reorganized in July 2010 from Joint Venture and Investment Bureau, with main activities centered around Hwanggumpyong Island and Rajin-Sonbong development.

The main agents for foreign currency earnings are the cabinet, military, JVIC, and Daepung International Investment Group*. Most of the trading companies are affiliated with one of the four groups.

In March, JVIC announced through the KCNA that “As the investment environment is favorably changing, joint venture and investment contracts are increasing. Investment interests from large companies are rising especially in our abundant rare-earth and underground resources as well as building railroads, roads, and power plants.”

*IFES and Choson Exchange previously discussed the merger of JVIC and “Daephung”

Jakub Rehor and Geoffrey See of Choson Exchange post interesting information on insurance in the DPRK:

According to the Choson Exchange:

In the planned, state-controlled economy of North Korea, familiar concepts (including insurance) acquire a very different meaning. In a market economy, insurance coverage indemnifies individuals or corporations for losses suffered due to natural disasters, accidents, sickness, or death. In North Korea, what is called “insurance” functions as a fundraiser for certain entities in the government.

There are two kinds of insurance products in North Korea, individual and enterprise insurance. Both are compulsory and are administered by KNIC (Korea National Insurance Corporation). Compulsory individual insurance is deducted automatically from salaries, and is used to fund the state-run healthcare system. Individuals cannot file claims under this insurance; all payments go into the healthcare system to cover its costs and to other state-directed uses. This individual insurance program was originally administered by Korea Central Bank, but parts of it were moved to KNIC where it formed a new department.

Individuals do not have the option of buying property or life insurance in DPRK. Only state-owned enterprises can use property insurance. Compulsory enterprise insurance covers property losses from all major perils (there is exclusion for war). There are no separate policies or riders for windstorm, earthquake, flooding, etc. Instead, policies specify coverage by type of property (animal insurance, machinery insurance, etc.)

Pricing is set without regard to individual risks and loss history. Rather, insurance operates on a pooled basis, with the goal of roughly matching premiums with claims and administration costs. There are no reserves and the state absorbs any losses or profits. As a result, KNIC has no incentive to care about profitability or correct pricing (and, presumably, service) for local insurance operations priced in North Korean won.

There is no independent regulatory authority in DPRK overseeing KNIC’s activities. In theory, the Central Bank and Finance Ministry should be involved, but in reality they don’t have the expertise or political backing. The only oversight of KNIC comes from the party which provides mainly political supervision.

Given the pooled nature of the compulsory policies and lack of risk-based pricing, KNIC acts mainly as an administrator, collecting premiums and disbursing payments. In this position it functions as a revenue generator for the government via two channels:

1. It fails to pay market replacement value of losses. Claims are settled at official government prices which do not reflect market reality.

2. It has been alleged that KNIC has been involved in reinsurance fraud. Media reports claim that European reinsurers write policies for KNIC which then submits false claims, or retains a portion of the claim settlement payments rather than passing it on to the insured.

The existing insurance arrangements in DPRK are clearly inadequate for the needs of foreign joint ventures operating in the Special Economic Zones. If North Korea hopes to attract foreign investment, it needs to modernize its insurance system to bring it into line with expectations of outside investors.

By Michael Rank

Independent British energy company Aminex PLC has withdrawn from North Korea, citing ‘”the volatile and unpredictable politics of the area”, just two years after signing a deal covering a 50,000 sq km area off the country’s east coast.

Aminex said it was “in the best interests of shareholders for the Company to withdraw from the Korean exploration programme and not participate in seismic acquisition. This decision will allow Aminex to focus on growing its African portfolio.”

The company first signed an agreement for co-operation in oil and gas with the North Korean government in 2004, but this failed to make progress. In 2010 it introduced a new foreign partner, Singapore-based Chosun Energy Pte Ltd, which provided finance for the initial stages and a regional base in Singapore. Aminex said at the time that “despite challenging international politics,” it had “succeeded in maintaining strong relations with the Korean authorities”, resulting in the production sharing contract signed in May 2010.

But industry sources said Stuard Detmer, who was made Aminex CEO last September, was less enthusiastic about North Korea than his predecessor Brian Hall, who remains executive chairman, and this had contributed to the company’s decision to pull out of the DPRK.

Aminex’s main focus is now on Tanzania, where in February it made the first gas discovery in the onshore Ruvuma basin, having also disposed of an oilfield in Texas.

Aminex said in 2010 that the agreement “involves reprocessing and reinterpretation of old seismic data plus acquisition of new marine seismic data during an initial period. Licence holder] Korex believes that the East Sea has great potential for significant discoveries of oil and gas, while recognising the political challenges in the region and the need to ensure that any international sanctions are strictly observed.”

See previous posts about Aminex here.

Although the Korea-watching world is focused on Tongchang-ri at the moment, I thought I would offer a mild distraction this Friday with some rarely-see-by-the-outside-world North Korean art. (A big thanks to a reader for these).

On display in the Mansudae Art Studio (the DPRK’s premier art studio) at this very minute, “The girl with the cell-phone”:

Click image for larger version

And below we have a painting from a book on the art exhibition on the 65^th birthday of the Korean Worker’s Party.  The painting is called “Sarangeui jib” (English title: “House of affection”):

Click image for larger version

I bet the painter was a man.

Blogging has been light as I try to clear a big project from my plate. I will play catch up on Tonchang-ri, SPA, KWP , and Google Earth this weekend.

For an additional smile, KCNA has an article today titled, “North Korea Launches Satellite of Love”.

Pictured above: (L) The location of the new Haedonghwa Center under construction in Pyongyang (Google Earth), and (R) a representation of the building’s exterior

The Korea Pyongyang Haedanghwa Foodstuff Company (조선평양해당화식품회사는)  has launched a new web page  on the Naenara portal providing content in English, Korean, and Chinese.

This new web site hosts pages of information not just on the company, its subsidiaries, its employees, and its products, but also on Korean food, culture and health. Among the more interesting claims made on the page:

Our service workers come from normal families, and they are not ones grown in the special environment or conditions.

The web page also provides addresses and maps of the subsidiary restaurants and factories in China and the DPRK.

Using information from the web page I was able to locate the position of the Haedanghwa Center (pictured at the top of this post).  It is obviously still under construction.  The lot on which the center is being built has been empty for the last dozen years and lies directly across the Taedong River from the new construction on Mansudae Street.

According to the Daily NK:

The North Korean authorities have ordered the formation of ‘Day of the Sun Gift Preparation Committees’ at the provincial Party level and subordinate ‘Day of the Sun Gift Subcommittees’ at the city and county scale, Daily NK has learned.

A Yangkang [Ryanggang] Province source who spoke with Daily NK on the 6th explained, “The ‘Day of the Sun Gift Preparation Committee’ was formed at the start of this month by the provincial Party Committee to prepare for the Suryeong’s birthday, and groups of areas were banded together to form the ‘Day of the Sun Gift Subcommittees’.”

“There was no distribution for February 16th,” the source recalled. “Possibly because the central Party received reports of popular discontent about this and asked some searching questions of provincial cadres, now they are running around trying to get ready for April 15th holiday distribution.”

“Enterprise traders are mostly bringing in soy bean oil, soap and towels via Chinese customs. They are printing ‘Day of the Sun 100th Anniversary’ on the towels,” he added.

The formation of the committees has also reportedly had a noticeable influence on levels of public expectation of the April 15th festivities, representing as it does the first time that ‘Gift Preparation Committees’ have been formed since they disappeared without a trace in the mid 1990s.

“They are already saying that each household is going to receive a huge gift for this Day of the Sun, so people are really expecting a lot,” the source said, adding, “The rumor among jangmadang traders is that every house is going to get a DVD player made by Hana Electronics in Pyongyang.”

As the source noted, the move comes following significant public discontent at the lack of gifts on February 16th (Kim Jong Il’s birthday).

On February 21st, Daily NK reported new of that discontent, citing a Yangkang Province source as saying, “There was a flood of criticism about the total lack of holiday distribution for Gwangmyungsung Day, so they began telling every organ, enterprise and people’s unit meeting, ‘That is because we are close to the 100th anniversary of the Suryeong’s birth, and the Party is preparing big gifts for that.’”

North Korea began giving snacks, rice and other foodstuffs to the people every year on the birthdays of Kim Il Sung and Kim Jong Il, along with things like school uniforms and blankets every 5th and 10th year, in the 1970s. However, the system ceased to function in the 1990s as the country was gripped by famine and economic disintegration.

Meanwhile, sources also report that with the arrival of the early spring lean season, a time when many people on the Korean Peninsula have traditionally struggled to find sufficient sustenance, prices in the market are beginning to creep up.

According to the Yangkang Province source, “Until late last week the Yuan price was 607 won, but now it is up to 635 won. The price of rice has also gone from 3,300 won to 3,800 won.”

Read the full story here:
North Forms Party 4.15 ‘Gift Preparation Committees’
Daily NK
Lee Seok Young
2012-3-5

Institute for Far Eastern Studies (IFES)
2012-2-29

North Korea is likely to make an official announcement of its new economic development plan in April to commemorate the centennial anniversary of Kim Il Sung’s birthday, which is also celebrated as a national holiday in North Korea as the “Day of the Sun.” In addition to the new economic plan, North Korea is also planning to align organizations and establish appropriate legislations in the foreign economic sector. The Daepung Group was recently consolidated with the Joint Venture and Investment Committee (JVIC).

According to an unnamed North Korean source, “many organizations in North Korea with overlapping functions or with unsatisfactory performance were merged as a part of promotion of North Korean socialism. The Daepung Group was merged as a bureau under the JVIC.”

The two chiefs of the Daepung International Investment Group (Daepung Group) were Workers’ Party of Korea (WPK) Unification Strategy Department Director Kim Yang Gun, who served as the chairman of the board, and Pak Chol Su, a Korean-Chinese businessman, who headed the group as the president and elected standing vice-chairman. They were in charge of attracting large foreign investment needed for the “10-Year State Strategic Plan for Economic Development (2011-2020).”

The WPK Director of Administration Jang Song Thaek is in charge of the Daepung Group and the JVIC and is likely to have ordered the merge of the two organizations to increase work efficiency. Kim Yang Gun’s position as the head of Daepung weakened after the souring of inter-Korean relations despite his efforts to bring investment from the South. As a result, Kim will likely step down from his position and Pak Chol Su and the executive management of the JVIC will likely manage the Daepung Group in the future.

The JVIC has also faced changes in its organization with the appointment of Ri Gwang Gun as the new head of the JVIC. Other foreign investment companies and related organizations were merged and the roles of the directors were revised.

The Beijing office of the JVIC has opened its doors in December 30 last year. North Korea is likely to dispatch experts and professionals from various organizations to provide “one-stop service” to attract more investment to North Korea, starting from this April.

Kim Chol Jin is the person in charge of the JVIC Beijing Office. The Rason Special Economic Zone (SEZ) and Hwanggumpyong SEZ will have a change in leadership, as Hong Suk Hyong will replace Kim Il Young as the new vice-chairman.

The previous chairman of the JVIC, Ri Su Yong, who was also the former ambassador of the DPRK to Switzerland, is now serving as the new advisor to Kim Jong Un at the Secretary’s Office.

*Addendum: Choson Exchange has been talking about this for a couple of months.  See posts here (2012-3-4),  here (2010-2-13) and here (2012-1-10).

UPDATE 4 (2013-1-10): Kyodo (via The Telegraph) solves the riddle of just why the Kim statues on Mansu Hill were covered up in October 2012 (See below)–a new version of the Kim Jong-il statue was put up. It replaced a statue that was erected in April 2012.

Below is a before/after comparison.

UPDATE 3 (2012-10-3): A reader sends in this image of the statues covered up.

Ruedeger Frank also publishes an image at 38 North.

UPDATE 2 (2012-4-14):

Pictured Above: Mansudae Grand monument.  (L) Google Earth, (R) Digital Globe

UPDATE 1 (2012-4-13): The Kim Jong-il statue and Kim Il-sung statues were unveiled today to much “fan fair”:

Above pictures via KCNA. Compare these with the photo I took of the Kim Il-sung statue in 2004.

Video of the unveiling can be found here (YouTube).

According to KCNA:

Statues of President Kim Il Sung and leader Kim Jong Il were successfully built on Mansu Hill.

The statues portray smiling Kim Il Sung who indicates the way ahead with his hand held forward and smiling Kim Jong Il blessing Songun Korea prosperous morrow while looking far into its bright future in the new century.

Large sculptures on both sides of the statues have been renovated on the highest level.

The unveiling ceremony took place with splendor Friday.

There were huge crowds of people from all walks of life, servicepersons, youth and students, 300 000 in all, on Mansu Hill and nearby streets. They were holding bouquets and balloons.

Supreme leader of the Workers’ Party of Korea and the people of the DPRK Kim Jong Un, first secretary of the WPK, first chairman of the National Defence Commission of the DPRK and supreme commander of the Korean People’s Army, was present at the opening ceremony.

Present there were senior party, state and army officials, chairpersons of friendly parties.

Also on hand were delegates to the celebrations of the centenary of the birth of the President, creators, officials and employees of the Mansudae Art Studio, officials of the party, armed forces and power bodies, social organizations, ministries and national institutions, anti-Japanese revolutionary fighters, anti-Japanese patriotic martyrs, servicepersons of the Korean People’s Army and the Korean People’s Internal Security Forces (KPISF), officials in the fields of science, education, literature and arts, public health and media, heroes, bereaved families of revolutionary martyrs, men of merits and working people in the city.

Also present there were a delegation of the Koreans in Japan and delegations of overseas compatriots and overseas Koreans, the chief of the Pyongyang mission of the Anti-Imperialist National Democratic Front, diplomatic envoys of different countries and representatives of international organizations here and foreign guests who are participating in the World Congress on the Juche Idea, the international festival and the April spring friendship art festival.

The statues were unveiled by senior party, state and army officials.

The moment thunderous cheers of “Hurrah!” resounded forth, fireworks were displayed and balloons were released.

Laid before the statues were large floral baskets in the joint name of the Central Committee of the WPK, the Central Military Commission of the WPK, the National Defence Commission of the DPRK, the Presidium of the Supreme People’s Assembly, Cabinet and in the name of all the Korean people.

Laid were floral baskets in the name of ministries, national institutions, armed forces organs, provinces, cities, counties, important units which were visited by the President and Kim Jong Il, units of the KPA and the KPISF, party and power bodies and factories, enterprises, co-op farms, universities, colleges and schools in Pyongyang and local areas.

Floral baskets were also laid by the diplomatic corps and the military attaches corps here and foreign guests and overseas compatriots.

All the participants bowed to the statues.

Kim Yong Nam, member of the Presidium of the Political Bureau of the WPK Central Committee who is president of the Presidium of the Supreme People’s Assembly of the DPRK, made a speech.

He said that Kim Jong Un instructed to build the statue of Kim Jong Il on Mansu Hill together with that of Kim Il Sung and energetically led the work to build them on the highest level in the shortest time possible.

It was possible to erect the statues on the highest level in a matter of some 100 days thanks to the yearning and devotion made by all the soldiers and people, overseas Koreans and the world progressives.

This great auspicious event is a precious fruition of the noble moral obligation of Kim Jong Un and his energetic leadership. It is also a striking manifestation of the unshakable will of the army and people of the DPRK to hold Kim Il Sung and Kim Jong Il in high esteem for all ages.

ORIGINAL POST (2012-3-1): Hannah Barraclough (Koryo Tours) reports on the CanKor web page:

A new statue of Kim Jong Il on a horse was unveiled at Mansudae Art Studio on the 15th Feb. It has been placed alongside the one already existing there of Kim Il Sung on a horse. It also appears that they are making a new large statue of Kim Jong Il which will go on Mansu Hill next to the one of Kim Il Sung there which is currently covered up. This is expected to be completed by April.

Additional Information:

1. The Kim Il-sung statue on Mansu Hill was recently covered up for renovations of the Korean Revolution Museum located directly behind it.

2. Here, here, and here are recent posts on different construction projects in Pyongyang.

3. A memorial to Kim Jong-il has recently been carved into Mt. Sokda and a memorial to Kim Jong-il is reportedly under construction in Hoeryong.

4. Here and here are additional stories on efforts to venerate Kim Jong-il.