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Choson Exchange with a JVIC update

Monday, February 13th, 2012

As we mentioned recently, Ri Chol, the broker of the Orascom deal, has moved on from JVIC. Where he has gone is not yet certain, but the choice for his replacement is interesting.

Ri Gwang Gun is the new head of JVIC and was introduced as such to the CEO of Orascom last week. Ri Gwang Gun has held various positions related to trade, including executive positions at state owned enterprises and as Minister of Foreign Trade. He apparently reports to Kim Yang Gon.

He was (is?) a Daepung Investment Group man. We’ve speculated that the existence of both Daepung and JVIC reflected a kind of “competition at the top” for influence in attracting and managing investments. They were both formed around the same time in 2009/2010 and have similar charges. Therefore, Ri Gwang Gun’s promotion could indicate a potential harmonizing of this competition.

Of course, the contours of this are difficult to see. Daepung, with stronger ties to the NDC, could be construed as taking over the JVIC from the top; perhaps the military has been able to exert itself to make sure that in the new leadership era, it does not get shut out of the investment game. (JVIC has become the more active and influential of the two groups.)

It could also be seen as a victory for JVIC, with Daepung being left to crumble and the top talent from that group being brought across. It remains to be seen if there will be some kind of exodus from either group.

Perhaps, also, it is some kind of compromise and a merger of sorts, with competing groups of elites ‘buying in’ to a unified system of investment management under the JVIC brand. They may see this as a way to increase effectiveness, avoid the negative outcomes of unfettered intra-elite competition and therefore encourage stability overall.

Posted in Choson Exchange, Joint Venture Investment Committee (JVIC), Korea Taepung International Investment Group (Daepung Investment Group), National Defense Commission | Comments Closed

Nampho port frozen (again)

Friday, February 10th, 2012

In February 2011 I posted reports that the DPRK’s west coast was experiencing record-low temperatures and the ports were frozen. Unfortunately for the North Korean people, history is repeating itself.

Pictured above (Yonhap): two satellite images of the DPRK’s west coast

According to the Donga Ilbo:

North Korea`s fisheries and shipping industries, two key earners of foreign currency for Pyongyang, have effectively been shackled due to a prolonged cold wave that has frozen waters in the Yellow Sea.
With the temperature reaching minus 10 degrees Celsius for more than a month, more than 40 kilometers of sea water in the Yellow Sea off the North`s coast have been frozen. This is the first time in decades that about 200 kilometers of the North`s coastline from the mouth of the Yalu River to the North`s Hwanghae provinces have been frozen.

Experts say the frozen water will not only affect the North’s fisheries and shipping industries, both of which are major earners of U.S. dollars, but also the Stalinist country`s economy and newly launched Kim Jong Un administration.

Massive ice blocks cover 200 kilometers of N. Korean coastline

In Seoul, the Korea Center for Atmospheric Environment Research and the Korea Meteorological Administration said Thursday that based on analysis of satellite images, massive ice 40 kilometers wide was detected in North Korean coastlines spanning 40 kilometers from the mouth of the Yalu River to coastal waters off Pyongyang.

According to the analysis, Korea Bay located in between the North’s Cholsan and Changyon peninsulas has remained frozen since Jan. 10 due to the cold wave. Coastal waters of Unryul County in South Hwanghae Province, the Chongchon River flowing into Korea Bay, and the port of Nampo at the mouth of the Daedong River running through Pyongyang are also covered with ice.

Chung Yong-seung, director of the environmental think tank, said, “In the past, waters off the North Korean coast used to be frozen. But the formation of such large-scale ice is unprecedented.”

Experts blame arctic ice moving south due to global warming for the ice formation.

North Korea has been hit by a severe cold snap this winter. According to the South Korean weather agency, the North’s average temperature last month was minus 8.4 degrees, 0.7 degrees lower than in an average year.

The Chosun Shinbo, the official newspaper of the pro-Pyongyang Federation of Korean Residents in Japan, recently said, “Temperatures in Pyongyang remained below zero from Dec. 23 last year through Jan. 31, the most extreme cold since 1945,” adding, “North Koreans can even walk on the Daedong River.”

Temperatures in the North fell further this month to minus 11.1 degrees on average, down 4.6 degrees from an average year.

Big burden on N. Korean gov

The ice formation in North Korean waters is pressuring the Kim Jong Un administration economically, experts said. The combined share of fisheries and agriculture in the North`s GDP is 20.8 percent, eight times higher than for South Korea (2.6 percent). Fisheries also play a key role in sustaining the North`s economy with catch volume reaching 630,000 tons a year.

Pyongyang`s dollar earnings have also been hit hard due to the frozen sea that has prevented fishing boats from leaving ports. Goh Yoo-hwan, head of the (South)Korean Association of North Korean Studies, said, “The North should export primary products such as fisheries goods, but no fishing operations due to the frozen water will take a huge toll on the North`s dollar earrings.”

Waters near China’s Liaodong Bay and Russia’s Vladivostok have also been frozen, causing the North’s maritime transportation to go awry. Due to soured inter-Korean relations, the North`s trade with the South and Japan has declined and raised the Stalinist country’s dependence on China to 56.9 percent.

Kim Yong-hyeong, a professor of North Korean studies at Dongguk University in Seoul, said, “If the ice formation in waters wreaks havoc on the North’s maritime transportation, this will destabilize the North Korean economy.”

The problem is that ice at sea is growing thicker. The National Meteorological Satellite Center in Seoul said the boundaries between ice blocks and waters in the North’s section of the Yellow Sea were vague last month, but grew clear this month with ice getting thicker.

Director Chung of the environmental think tank said, “Given North Korea’s weather conditions, the ice in the sea will grow thicker through early next month,” adding, “North Korean society will be hit hard if its fisheries and shipping industries are grounded for more than two months.”

And just how productive is the DPRK’s fishing sector? According to Yonhap:

Chung Yong-seung, head of the research institute, said it is rare for the port to freeze two winters in a row, a development he said could have a negative impact on the North’s fishing industry.

North Korea’s catch reached 663,000 metric tons in 2009, the latest year for which statistics are available, according to the South Korean government data.

Read the full reports here:
N. Korea’s largest port frozen for 2 straight winters
Yonhap
2012-2-10

Extended cold wave freezes key NK sectors of fisheries, shipping
Donga Ilbo
2012-2-10

Posted in Agriculture, Food, International trade, Ministry of Foodstuff and Daily Necessities Industry, Sea shipping, Transportation | Comments Closed

DPRK exercising stricter enforcement of official prices

Tuesday, February 7th, 2012

According to the Daily NK:

At the beginning of last month, the North Korean authorities ordered local commercial management offices to strengthen oversight to ensure that products were being sold at official state prices, according to a source from Shinuiju on February 6th.

Meeting with Daily NK on a visit to Dandong, China, the source explained, “Friction has started up again between market managers and traders because of orders at the start of the year to make sure that everything is sold at the state-designated price. They do this every year, but this year they are confiscating products and transferring them for sale in state stores.”

Price-related orders are issued annually in North Korea, where the authorities are still reluctant to countenance market price autonomy despite fifteen years of ad hoc marketization. As such, the Ministry of Procurement and Food Policy sets the prices of key goods and posts them at the entrance to markets. These prices are approximately uniform across the country.

Only ‘regional’ items being treated differently; prices for these items are set by pricing bureaus established under provincial People’s Committees. Most obviously, the state price of seafood is cheaper in coastal areas than in inland parts of the country.

However, real price differentials make selling at these state prices untenable; for example, the market price of a kilo of rice in Shinuiju is currently hovering around 3,200 won, while that for corn is 2,200 won, yet the state prices are 1,600 won and 690 won respectively. Therefore, traders traditionally simply pretend to sell at state prices when inspectors turn up, before resuming trade at market prices once they have left.

But the problem this year is that enforcement is stricter than usual, with illegally priced products being confiscated, transferred directly to state stores and sold at state prices. According to the source, “In the past state prices were only symbolic and inspectors didn’t enforce them. Even if they confiscated something you could pay them a little and get it back. But now they are just selling those products directly at state prices, so a lot of people who have ignored the crackdowns are ending up in a real fix.”

Not only that. “People who are caught like this are banned from trading from a stall for a month,” the source added. “Traders are reacting very carefully now as a result.”

However, history has taught traders that the crackdown is unlikely to last too long, and anticipate a return to less strict oversight in due course.

Read the full story here:
Annual Market Crackdown Ensnaring the Careless
Daily NK
Park Jun Hyeong and Jeong Jae Sung
2012-2-7

Posted in Black markets, Economic reform, Food, General markets (FMR: Farmers Market), Ministry of Procurement and Food Policy, Price liberalization | Comments Closed

Kim Jong-un’s January 2012

Tuesday, January 31st, 2012

UPDATE 1: Luke Herman provides some additional infomration here.

ORIGINAL PSOT: January has been quite interesting for DPRK watchers as we are seeing the steps taken to establish the legitimacy of Kim Jong-un. Below I have cataloged some visible components of this process:

Kim Jong-un’s “on the spot guidance” (OSG):

Kim Jong-un began the year with a visit to Kumsusan palace to pay respects to president Kim Il-sung and leader Kim Jong-il. The political and cultural symbolism speaks for itself.

Kim Jong-un’s second guidance trip (reported on the same day) was reportedly to the Seoul Ryu Kyong Su 105 Guards Tank Division. This visit is symbolically important because it was on a guidance trip to this very same division that (according to the North Korean narrative) Kim Jong-il began his “Songun” (Military First) leadership. According to KCNA (2010-8-24):

An oath-taking meeting of servicepersons of the three services of the Korean People’s Army took place at the Ssangun-ri Revolutionary Site in Sukchon County, South Phyongan Province, on Tuesday on the occasion of the 50th anniversary of Supreme Commander Kim Jong Il’s start of the Songun revolutionary leadership.

The reporter and speakers at the meeting recalled that Kim Jong Il started the Songun revolutionary leadership by providing field guidance, together with President Kim Il Sung, to the Seoul Ryu Kyong Su 105 Guards Tank Division of the KPA on August 25, Juche 49 (1960) stationed in Ssangun-ri.

Here is a satellite image (Google Earth) of the Ssangun-ri Revolutionary Site (쌍운리 혁명사적지, 39°25’3.20″N, 125°44’30.74″E):

Joseph Bermudez wrote more about the Seoul Ryu Kyong Su 105 Guards Tank Division here. Kim Jong-il last visited the unit on 2010-12-31.

The remainder of Kim’s guidance trips in January have been overwhelmingly military in nature:

KPA Air Force Unit 1017
Concert Given by Military Band of KPA
Flight Training of KPA Air Force Unit 378
Demonstration by Players of Western Area Aviation Club (KPA)
Mangyongdae Revolutionary School (KPA)
Lunar New Year Reception
Machine Plant managed by Ho Chol Yong (KPA)
Kim Jong Un Inspects Command of KPA Large Combined Unit 671
Kim Jong Un Inspects KPA Air Force Unit 354
Kim Jong Un Inspects KPA Unit 3870
KPA Unit 169 honored with the title of the O Jung Hup-led Seventh Regiment
Music and dance performace
Hero Street Meat Shop
Pyongyang Folk Village (KPA)
2012 New Year’s concert “The Cause of the Sun Will Be Immortal” given by the Unhasu Orchestra
Seoul Ryu Kyong Su 105 Guards Tank Division
Tribute to Kim Il-sung and Kim Jong-il at (Kamsusan)

The media/propaganda campaign:

1. On Kim Jong-un’s birthday, KCTV ran a much–written–about, hour–long documentary titled, Inheriting the Great Achievement of the Military First Revolution of (Mount) Baekdu, which highlights Kim Jong-un’s bona fides as a great military strategist (see full video here). It also allegedly mentions Jong-un’s mother, though not by name, who was born in Japan.

At this point I don’t have much to add on the film except a translation of Kim Jong-un’s quote in the film, which may be his first official one, provided by C. La Shure in the Korean Studies Digest:

“I am accustomed to working through the night and so am not bothered by it. The most joyous and happiest moments for me are when I can bring joy to the comrade supreme commander. Thus, though I have stayed up several nights, I have worked without knowing weariness. Even when I work through several nights, once I have brought joy to the comrade supreme commander, the weariness vanishes and a new strength courses through my whole body. This must be what revolutionaries live for.”

2. Kim Jong-un’s “motherly” or “nurturing” traits have also been emphasized — imitating not only Kim il-sung’s appearance but also his public mannerisms (a la Bryan Myers):

Pictured above: (Top) The cover of B.R. Myers’ book, The Cleanest Race. (Bottom) Kim Jong-un’s visits to KPA Unit 354 (L) and the Mangyongdae Revolutionary School (R)

3. Kim Jong-un has issued several autographs which look remarkably like his father’s (and grandfather’s):

Pictured above: (L) Kim Jong-il’s signature taken from North Korean television. (R) Kim Jong-un’s signature as reported by KCNA on 2012-1-3. The Choson Ilbo also picked up on this.

4. The KCNA web page now has a special content filter built specifically to highlight Kim Jong-un’s activities. They have also started printing his name in a larger type.

5. Kim Jong-un is now part of the DPRK’s infamous criticism sessions. According to the Daily NK:

“The Central Party is propagandizing the greatness of Kim Jong Eun through criticism sessions, and coming down hard on anybody who is reported to have said anything hinting at any doubt of his greatness,” the source said, adding, “all cadres are being careful not to get caught out by this, without exception.”

6. Kim Jong-un is being called “father” in the official media. According to the Daily NK:

Choson Central News Agency (KCNA) on the 25th reported that Kim Jong Eun made a visit to the Mangyondae Revolutionary School. During his visit, Kim Jong Eun was greeted by staff and students as “Dear Father,” a designation stressing loyalty.

Rodong Shinmun, a day before, ran an article entitled ‘The sun shines forever’. It stated “our people broken hearted at the loss of our nation’s Father (Kim Jong Il ) and out of love our father (Kim Jong Eun) warmly welcomed the return of our people from overseas.” This statement showed that Kim Jong Eun has succeeded being called ‘father’ following Kim Jong Il.

The newspaper went on to praise Kim Jong Eun, “our people are all one in our father and persist with single-minded unity and great heart.”

7. The Lunar New Year holiday was co-opted to celebrate the rise of Kim Jong-un. In addition to public ceremonies and performances in honor of one of the three leaders (Kim Il-sung, Kim Jong-il and Kim Jong-un), the practice of distributing holiday rations in the name of the leader was resumed. In a sign of the “back to the future” economic policies which may be on the horizon, the DPRK is rumored to be interested in reviving nation-wide food distribution through the PDS.

8. KCNA announced an amnesty for convicts. Details were scarce.

Posted in 2011 food shortage debate, Food, Kim Jong Un, Military, Political economy, Public Distribiution System (PDS) | 3 Comments »

Food distribution to resume for the first time in seven years

Friday, January 27th, 2012

Institute for Far Eastern Studies (IFES)
2012-1-25

A month into Kim Jong-un’s ascension to power, it is reported that food distribution is likely to resume nationwide in North Korea.

Many experts evaluate this as a symbolic measure to propagate the construction of a powerful economy and improve the lives of the people. For the North Koreans, the most apparent and obvious economic accomplishment is the improvement of the food situation. Thus, North Korea is most likely to take action to normalize food rations as its top priority.

According to a statement made by a South Korean government official on January 20, “Kim Jong-un and his leadership will begin the food distribution as a way to prove to its people about changes forthcoming in the new regime.”He also added, “After years of propagation for the building of a strong and prosperous nation, they must demonstrate it to the people with noticeable results.”

The amount of rations to be provided is still unclear. However, the source emphasized that it was very likely for rice rations to resume, especially with the approaching national holidays, such as the Lunar New Year and Kim Jong-il’s birthday (February 16).

He also commented that “the food distribution will be a nationwide movement and the food ration system will go into effect based on the distribution network of available food supply.”

According to the Food and Agricultural Organization (FAO) and the World Food Programme (WFP), North Korea’s food production in 2011 compared to the previous year rose by 8.5 percent, sitting at about 5.48 million tons (of rough grains or 4.66 million tons of milled grains).

The minimum amount of food consumption in North Korea is 5.4 million tons, but a shortage of about 400,000 tons is expected, including the international food aid and industrial food imports. Among the recent years, this marks the largest deficiency in food supply.

However, such shortages can be overcome with additional food imports and distributing mainly rice reserves.

The last national food distribution in North Korea was in 2005, seven years ago.

North Korea is also likely to exert more effort in food processing production to improve the distribution of daily necessities. With relatively little dependence on raw material imports, North Korea is planning to improve the food situation through expanding the food processing production in agricultural, fishery, and livestock industries, with less competition with Chinese products.

Posted in Food, Institute for Far Eastern Studies, Kim Jong Un, Public Distribiution System (PDS), UN, UN Food and Agriculture Organization, UN World Food Program | 1 Comment »

KCNA: 20-day industrial output value increases over Jan 2011

Friday, January 27th, 2012

According to KCNA (2012-1-25):

The gross industrial output value grew 1.2 times for twenty days of January this year as against the same period last year.

This is the result of the high-pitched drive waged by all the workers of the country since the first day of this year after receiving with excitement the joint calls of the Central Committee and the Central Military Commission of the Workers’ Party of Korea, the joint New Year editorial for this year and the letter of the working people in South Hamgyong Province.

In the period, the Ministry of Light Industry increased the production 1.4 times and the Ministry of Food and Daily Necessities sharply boosted the production.

Thermal and hydropower stations have increased the ratio of operating the generating equipment.

Much effort is being concentrated on supplying coal to the thermal power plants and chemical and metal plants and developing more coal beds.

The Ministry of Coal Industry produced 12,000 more tons of coal than planned for the 20 days.

Iron mills and steelworks also increased the production.

The freight transport volume increased by 12 percent from the same period last year.

Innovations were made in the production of vinalon and fertilizer by the industrial establishments in the field of chemical industry and in the production of custom built equipment and mining machines by the industrial enterprises of the field of machine industry.

The forestry stations and pit wood stations increased the timber production.

Progress has been reported on a daily basis from the important projects including the building of apartments in Mansudae areas and the Paektusan Songun Youth Power Station.

For the uninitiated, this is about as close as the DPRK gets to releasing economic statistics. Note there are no base numbers–only [some] % increases. Also, despite the measure being officially named “output value”, it is really just a claim of increased physical production. There is no value (prices) or mention of “services” included in these measures.

Unfortunately without more solid numbers, and the proclivity to ascribe productivity gains to effective propaganda, these reports cannot be taken seriously.

Although we all talk about the DPRK’s GDP and per capita income as if the numbers are solid, the reality is quite the opposite. In addition to the general lack of information, there are all sorts of methodological problems with assessing the value of the DPRK’s economy. Here are some helpful sources if you want to learn more:

1. DPRK Economic Statistics Report

2. G. Warren Nutter papers:

– (JSTOR) “Soviet Industrial Growth”, Source: Science, New Series, Vol. 130, No. 3370 (Jul. 31, 1959), pp. 252-255

-(JSTOR) “Industrial Growth in the Soviet Union”, The American Economic Review , Vol. 48, No. 2, Papers and Proceedings of the Seventieth Annual Meeting of the American Economic Association (May, 1958), pp. 398-411

-(JSTOR) Some Observations on Soviet Industrial Growth”, The American Economic Review , Vol. 47, No. 2, Papers and Proceedings of the Sixty-eighth Annual Meeting of the American Economic Association (May, 1957), pp. 618-630

3. The North Korean Economy by Nicholas Eberstadt

4. Assessing the economic performance of North Korea, 1954–1989: Estimates and growth accounting analysis

5. Bank of Korea’s assessment fo the DPRK economy in 2010.

6. My North Korean Economic Statistics Page

Posted in Agriculture statistics, Central Bureau of Statistics (CBS), Coal, Construction, Dams/hydro, Electricity, Energy, Forestry, GDP statistics, Lumber, Mining/Minerals, Ministry of Coal Industry, Ministry of Foodstuff and Daily Necessities Industry, Ministry of Light Industry, Statistics, Transportation | 1 Comment »

DPRK celebrates lunar new year in its own style

Monday, January 23rd, 2012

KCNA reported that North Koreans celebrated the lunar new year by paying tribute to Kim Jong-il:

On the lunar New Year’s Day, the Korean people are ardently yearning for the leader Kim Jong Il.
People are seen laying flowers or floral baskets before portraits of smiling Kim Jong Il displayed throughout the country, recollecting the undying feats he performed for the country and the people.
An old man, Ri Thaek Ju, living in Sosong District, Pyongyang, told KCNA, “I don’t think the leader left his people. He is among the people. He is greeting the Lunar New Year with us.”

They also laid floral baskets at Kim Il-sung statues (video here):

Floral baskets were placed before the statues of President Kim Il Sung in different parts of the country on the lunar New Year 2012.
Service personnel and Pyongyangites from all walks of life and school youth and children and overseas compatriots staying in the socialist homeland, visited his statue on Ryongnam Hill to pay tribute to him.

…And they also performed plays offering well wishes to Kim Jong-un:

Schoolchildren’s performance “Country of Eternal Sun” took place at the Mangyongdae School Children’s Palace Monday on the lunar New Year 2012.
The performance began with prelude “Please accept, the dear respected Kim Jong Un, our greetings on lunar New Year.”
The performers made a deep bow to Kim Jong Un, representing the unanimous best wishes of the younger generation of the DPRK.

So there are “three generations” of post-revolution North Koreans, and each one now has their own leader to pay homage to on Lunar New Year. Interestingly, Lunar New Year was banned by the DPRK until the 1980s as it was classified as a Chinese holiday. But why ban a cultural holiday when you can co-opt it for political purposes?

The AP also published this story.

UPDATE 1: On January 24, KCNA reported that Kim Jong-un hosted a banquet for senior members of the North Korean government.

UPDATE 2: On January 25, the Daily NK reported some very interesting information from within the DPRK which further shows how the Lunar New Year has been co-opted as a tool for the legitimization of Kim Jong-un’s rule:

A Chinese trader who resides in Pyeongseong, North Korea, arrived in Dandong on January 21 for the start of the Lunar New Year holiday period. The trader, who in this article we will call ‘John’, received permission to visit China after waiting over a month to leave the country since the death of Kim Jong Il. John met with his suppliers in Dandong to order items he would take back into North Korea, before departing for Shenyang to visit relatives.

Daily NK met with John in Shenyang on January 22 to ask him whether or not the rations announced by North Korean authorities had actually been distributed as planned. As he is a Chinese expatriate, he says he did not receive any rations this time, however “ordinary people did get them. The rations were half white rice and half mixed-grain rice.”

“Even within Pyeongseong, people got different rations depending on what street or neighborhood they live in – some got 3 days worth, others got 5. Our People’s Unit gave 3 days. But that wasn’t the problem; in one area people got grain rice mixed with corn, and the really unlucky amongst them were disappointed to find that their rations had already gone off.”

“On the way here I also heard from people living in Sinuiju who were given corn soup rather than rice of any sort,” John says. Given that corn soup costs roughly half as much to provide as other grain rations, evidently the government distributed corn-based rations in some cities and counties in order to help carry out its plan.

According to John, authorities also offered to supply fish to citizens. “They handed out coupons to buy a sailfin sandfish for 2,800 won and called this an order from Kim Jong Eun.” With this coupon citizens could head to a government-run store and purchase the fish for 2,800 won, however John says that most people declined to buy from the government-run stores when fresh sandfish could be bought from the market for 3,300 won.

Regarding crackdowns on foreign currency, John said that “It would be hard for people like me to live if the government stopped people using the Yuan. When I purchase stock I have to pay for it in Yuan, so if I wasn’t able to do that I wouldn’t be able to trade. That might end up being the case again. The ‘gruppas’ (inspection teams) are showing up to carry out crackdowns on illegal foreign exchange transactions, but this has just driven most people to do it in the privacy of their own houses.”

“Even people who lose their foreign currency in the crackdowns can get it back with a bribe. How can you stop that? Even cadres like foreign currency, so how can it work if they order a crackdown?”

Posted in Art, Civil society, Food, Kim Jong Un, Political economy, Public Distribiution System (PDS) | 1 Comment »

Preciseness emphasized for the tax investigation of special economic zones

Monday, January 23rd, 2012

Institute for Far Eastern Studies (IFES)
2012-1-18

North Korea is continuing to put forward new laws for the special economic zones (SEZs) such as Rajin-Sonbong and Hwangumpyong Island. Recently, North Korea announced special guidelines for the tax investigations of foreign businesses in the zones.

North Korea’s Academy of Social Science Newsletter Volume 4 (published on November 2011) released an article titled, “Suggestions to Improve Tax Investigations in the Special Economic Zone,” which included detailed instructions for the policy improvement for tax investigation for SEZs. Here, particular emphasis was placed on the enhancement of the tax investigation system — to be accurate and rational — for the foreign investment companies.

The article explained, “Based on the principles of equality and reciprocity for the construction of powerful economic state, the tax investigation system in the SEZ must be improved especially at the present time when SEZs are being constructed and expanded to increase economic trade with other nations.”

It also stressed tax officials must be equipped with, “comprehensive knowledge and experience who accurately understand the entire process of business management. They must be capable of creating new tax investigation methods and be able to discern the various forms of tax evasions.”

For the qualifications of the tax officials, the article recommended that the officials be selected based on their knowledge and experience; ability to develop techniques for tax investigation; awareness of rules and regulations of tax laws and bylaws, and regulations of rights and responsibilities of taxpayers; and capability of conducting research on foreign tax investigation policies.

The Academy of Social Science is a government agency of the DPRK, and the recent article on the tax investigation reflects that the government has already begun the process of implementing the tax investigation guidelines and laws in the SEZs.

The article emphasized establishing a tax investigation system acceptable to foreign companies. One can construe this as North Korea’s effort to attract more businesses to the SEZ, which is currently suffering from poor performance.

In addition, North Korea is believed to be placing weight on the tax investigation based on its past experiences with the South Korean companies in the Kaesong Industrial Complex (KIC). In the past, the officials of the Central SpecialDirect General Bureau toured the industrial districts in China and showed keen interests in the tax management.

On December 8, 2011, the KCNA reported that the Standing Committee of the Supreme People’s Assembly (SPA) has adopted the Economic Zone Act for Hwanggumpyong and Wihwa Islands. The law was revised and supplemented to include the Free Economic and Trade Act of Rajin-Sonbong. However, the details of these laws were not disclosed and some experts are predicting that these laws are likely identical to the Chinese laws in China’s flourishing SEZs.

However, on January 11, 2012, Yonhap News Agency of South Korea reported that China rejected the new Special Economic Zone Act of the DPRK because it is “not business-friendly.” The news reported, “China said the law was not business-friendly, telling North Korea that the law had some problemsregarding taxes, accounting, remittance of profits and stability of investment.” It is reported that North Korea is working on the revision of these laws and likely for a new special zone act to be passed by the Standing Committee of the DPRK’s Supreme People’s Assembly (SPA).

Posted in Domestic publication, Hwanggumphyong and Wihwado Economic Zones (Sinuiju), Institute for Far Eastern Studies, Rason Economic and Trade Zone (Rajin-Sonbong), Special Economic Zones (Established before 2013), Supreme Peoples Assembly | Comments Closed

Enlarged plenary meeting of Cabinet held

Sunday, January 22nd, 2012

Pictured above (Google Earth) is Changsong Town in North Pyongan Province. This town is the home of the Changsong Joint Conference which was held in August 1962. This meeting was referenced in the DPRK’s most recent Cabinet plenary meeting on the DPRK economy.

According to KCNA (2012-1-22):

An enlarged Cabinet plenary meeting was held.

Present there were Premier Choe Yong Rim and cabinet members.

Attending the meeting as observers were senior officials of the organizations under direct control of the Cabinet, directors of management bureaus, chairpersons of provincial, city and county people’s committees, chairpersons of provincial rural economy committees, chairpersons of provincial planning committees, directors of provincial foodstuff and daily necessities management bureaus and managers of major factories and enterprises.

Prior to the meeting, the participants paid silent tribute to the memory of leader Kim Jong Il.

The meeting reviewed the fulfillment of last year’s national economic plan and discussed how to implement the decision of the Political Bureau of the Central Committee of the Workers’ Party of Korea, joint calls of the WPK Central Committee and the Central Military Commission and the militant task put forward in the joint New Year editorial.

Vice-Premier Ro Tu Chol made a report to be followed by speeches.

The enlarged meeting set it as a priority task for this year to direct efforts into developing light industry and agriculture to improve the people’s livelihood and successfully carrying out the WPK’s prosperity-oriented strategy in the pilot domains and basic industries of the national economy upholding the flames of South Hamgyong Province. It also indicated the tasks and ways for it.

Also discussed was an issue of raising higher the flames of great innovation of South Hamgyong Province in the light industrial and agricultural fields.

The meeting mentioned the need to produce quality consumer goods favored by the people in the field of light industry and effect a decisive turn in development of local industry this year marking the 50th anniversary of the historic Changsong joint conference.

It also stressed the need for ministries and national institutions to help Changsong County in its industrial development.

Also discussed at the meeting were such issues as fulfilling the assignments for grain production for 2012 both in lowland and mountainous areas, making the best use of modern stockbreeding and poultry bases and large fruit and fish farms as well as the tasks for ministries and national institutions to preferentially supply materials, equipment and electricity to farming processes.

The meeting drew attention to the tasks for the industrial fields of electric power, coal, metal, railways and machine and construction and building materials, etc.

The meeting tabled the tasks for all ministries, national institutions and provincial people’s committees to lay their own scientific and technological foundations for stepping up the work for turning the economy into one based on technology in a forward-looking manner as required by the industrial revolution in the new century.

It also discussed the tasks for the fields of education, literature and art, public health, sports, capital construction, land management and urban management.

The meeting stressed the need for all economic officials to preserve the socialist principle and ensure profitability in economic management, operate and manage the economic work on the basis of detailed calculation and science as well as the need for ministries, national institutions and industrial establishments to set up strict order regarding planning, financial dealings and administration.

Relevant decisions were made at the meeting.

As premier of the Cabinet Choe Yong-rim has made quite a few prominent appearances in the DPRK media in the last two years which highlight his official efforts to improve the North Korean economy. His most recent public appearance (January 12) is reported to have been at the Jenam Coal Mine.

Kim Jong-un, however, is not a member of the Cabinet, so he did not attend the meeting. To date his legitimacy is being established through his relationship to Kim Jong-il/Kim Il-sung and as a leader of the KPA—rather than as a leader in the government or even the party (at least so far).

As a result, Kim Jong-un’s guidance visits have consisted almost exclusively of visits to KPA units. In this month alone, he has visited the 105 Tank Brigade, KPA Unit 169, KPA Unit 3870, KPA Unit 354, KPA Unit 671, and the KPA soldiers constructing the Pyongyang Folk Village on the outskirts of Pyongyang. Uriminzokkiri has also credited him with spearheading the DPRK’s nuclear tests.

UPDATE: Here is Yonhap coverage of the meeting.

“Changsong Joint Conference”
The KCNA article prompted me to look into the “Changsong Joint Conference”, a term that did not ring a bell. The most recent reference I can find to it is this blurb from a March 2011 article in Korea Magazine:

The Changsong Joint Conference of Local Party and Economic Officials was held in August 1962.

The conference marked the beginning of developing the local industry throughout the country.

In recent years the county has made strenuous efforts to carry out the plan of the Workers’ Party of Korea for the building of a thriving nation and achieved many successes.

Hundreds of hectares of forests of raw materials and timber forests including pine-nut, wild-walnut and larch forests have been newly created.

The Changsong Foodstuff Factory gathers in scores of kinds of wild fruits including acorns, wild grapes, fruits of Actinidia arguta and Crataegus pinnatifida every year in mountains.

Recently its officials and workers have modernized all production processes including wild fruit drinks and wines as required in the IT age to produce foodstuffs in time.

Wines made from the fermented juice of wild grapes, fruits of Actinidia arguta and other wild fruits, Crataegus pinnatifida, Rubus crataegifolius, carbonated Actinidia arguta and other fruit juices, dried bracken and sliced bracken and other wild vegetables preserved in soy sauce are in great demand for their peculiar flavour.

The Changsong Textile Mill which started operation with six housewives has been turned into a modern fabric producer. As a treasure mill, it makes a great contribution to the improvement of the people’s standard of living. It produces quality fabrics, woolen knitted goods and quilts and blankets with local raw materials.

The Changsong Paper Mill produces paper from ground pulp. It has streamlined the equipment to improve the qualities of goods.

Looking round the local-industry factories in Changsong County in November last year, Kim Jong Il kindled the flame of developing the local industry throughout the country after the model of Changsong.

Changsong County stands at the head of development of local industry. Now its people work harder to change further the looks of their home village.

Another blogger seems to have located a single page of a book on the Changsong Joint Conference. Fortunately, he typed out the introduction:

The great leader Comrade Kim Il Sung had made a farsighted plan for bridging the gap between town and country and between regions and raising equally the living standards of all the working people. For this Changsong County had been taken as a model.

The great leader who had long pushed preparations for rapid improvement in the livelihood of the mountain peasants, studied deeply the state of affairs in this part of the country, and through his several on-the-spot guidances, paved the shortest cut to establish a socialist paradise.

In August 1962, in order to spread the example of Changsong across the land he convened the historic Changsong Joint Conference of Local Party and Economic Functionaries. There he put forward a new policy and overall ways and means to enhance the role of the county and develop local industry and agriculture, so as to improve radically the people’s living conditions.

In 1974, our people erected in Changsong the historic monument to the on-the-spot guidance of the respected and beloved leader Comrade Kim Il Sung, out of their wish to retell throughout generations the profound care of the fatherly leader who had shown the bright future of mountain villages and transformed that area into a people’s paradise fine to live in.

Kim Jong-il last visited Changsong in November 2010 where he visited the Changsong Foodstuff Factory, Changsong Textile Mill, and Changsong House of Culture. The first two locations are the shining examples of the success of the Changsong Joint Conference. The Changsong House of Culture is where the meeting was officially held in 1962.

But if the goal of the conference is to reduce the disparity in the DPRK’s living standards, Changsong is probably not the best place to start. Changsong is home to one of the North Korean leadership’s most well-known luxury retreats. This is because it was was extensively photographed by Kenji Fujimoto while he was working as Kim Jong-il’s personal chef. See a satellite image and Mr. Fujimoto’s pictures of the compound here. You can see the Taegwan leadership train station Kim used to visit the compound here.

Posted in Agriculture, Cabinet, Central Committee, Central Military Commission, Domestic publication, Kim's New Year Address (Joint editorials), Light Industry, Manufacturing, Political Bureau | 1 Comment »

Associated Press in Pyongyang

Tuesday, January 17th, 2012

UPDATE 5 (2012-1-17): The Associated Press is opening a Bureau in Pyongyang. Martyn Williams reports:

The Associated Press has opened a news bureau in Pyongyang making it the first western news agency to have a reporter and photographer based in the North Korean capital.

The bureau represents a coup for the AP over the competition, but its close cooperation with the state-run Korean Central News Agency, necessitated to realize the deal, brings with it questions over editorial independence.

AP President Tom Curley and KCNA President Kim Pyong Ho officially opened the bureau in Pyongyang on Monday. It came six months after the two met in New York and signed a basic agreement towards the office.

The bureau will be housed inside KCNA’s headquarters and will be permanently staffed by two North Koreans: reporter Pak Won Il and photographer Kim Kwang Hyon.

AP didn’t provide details of the background of the two and declined to say if they were on the payroll of AP or KCNA.

Regardless of their employment status, they were almost certainly trained in the North Korean media-slash-propaganda machine with books such as “The Great Teacher of Journalists” — a heavy tome filled with advice to journalists by Kim Jong Il. Their appointment would have been approved by North Korean authorities.

The two have already contributed to AP’s coverage over the last few weeks on the death of Kim Jong Il.

Pak was credited as providing details for several AP stories on the funeral, including “Thousands Gather In Snow To Mourn Kim Jong Il.” Kim Kwang Hyon is believed to be the photographer responsible for several unattributed photographs issued by AP of the funeral.

Video footage of the office released by KCNA shows pictures of Kim Il Sung and Kim Jong Il hanging on the wall above some desks. A TV hangs on the wall and there also appears to be a refrigerator and microwave oven.

It’s this closeness with KCNA that has AP walking a delicate editorial line.

AP is based on a traditional of independent reporting, and KCNA is anything but independent. Its Japan-based website describes the agency as speaking “for the Workers’ Party of Korea and the DPRK government,” and its daily output is heavy with glorification of its leader and threats against South Korea and the U.S.

But when it comes to North Korea, KCNA is the only game in town.

North Korea has remained one of the few places in the world that has remained almost totally impenetrable to foreign journalists. Visits are strictly supervised and controlled, and information flow in and out of the country is just a trickle. This was demonstrated vividly in December when governments and media organizations were apparently unaware that anything was amiss in the days before the death of Kim Jong Il was announced.

Getting coverage from Pyongyang, albeit with assistance from the government’s news agency, is probably better than nothing.

The real payoff will come in the regular reporting trips by AP staffers that form part of the deal. Korea Bureau Chief Jean Lee and Chief Asia Photographer David Guttenfelder will oversee the bureau and are likely to continue visiting the country.

It also gives AP a leg up on competitors such as Reuters and AFP when major news breaks in Pyongyang, such as the recent death of Kim Jong Il.

UPDATE 4 (2011-9-29): The Associated Press has signed a deal for HD video from the DPRK. According to themselves (notice it is a new story not a press release!):

Associated Press President and Chief Executive Tom Curley said Thursday the agency has signed an exclusive deal to provide high definition news video from North Korea to broadcasters worldwide.

In a speech in Tokyo, Curley unveiled the three-year agreement with North Korean state broadcaster KRT and the Ministry of Posts and Telecommunications.

“Today’s announcement means that AP will be the only news agency to transmit broadcast quality HD video of key events in North Korea,” he said at the Japan National Press Club.

Associated Press Television News will also have exclusive rights to deliver HD video feeds for individual broadcasters wishing to transmit their own reports from North Korea.

The infrastructure will be established ahead of 2012, when the so-called Hermit Kingdom celebrates the 100th anniversary of the birth of the late leader Kim Il Sung.

The deal extends AP’s recent push into North Korea to a level unmatched by any other Western news organization.

AP announced in June that it had also signed a series of agreements with the Korea Central News Agency, including one for the opening of a comprehensive news bureau in Pyongyang.

Expected to launch early next year, the office would be the first permanent text and photo bureau operated by a Western news organization in the North Korean capital. It would build upon the AP’s existing video news bureau, which opened in Pyongyang in 2006.

In addition, the agencies signed a contract designating the AP as the exclusive international distributor of contemporary and historical video from KCNA’s archive. The agencies also plan a joint photo exhibition in New York next year. They already had an agreement between them to distribute KCNA photo archives to the global market, signed earlier this year.

“This is a historic and watershed development,” Curley said. “For AP, it extends further and deeper our global reach and shows the trust that is at the core of AP reporting. For the world, it means opening the door to a better understanding between the DPRK and the rest of the world.”

The latest deal also highlights AP’s broader digital transformation efforts in a rapidly evolving media landscape.

AP, which sees video as a critical part of its future, is investing at least $30 million into its video business. Under an 18-month plan, the agency is upgrading all infrastructure to eventually provide HD video that “will fit easily into digital platforms of any media customer anywhere.”

Curley told the group of Japanese journalists that while the U.S. is “ground zero” for the digital media shift, “the movement of information consumption to online platforms and devices is here to stay, and it will inevitably upend traditional forms of media everywhere in the world.”

Founded in 1846, the AP maintains bureaus in some 100 countries around the world and is the oldest and largest of the world’s major news agencies.

UPDATE 3 (2011-7-12): Reuters is also establishing a presence in the DPRK.

UPDATE 2 (2011-7-1): The AP is opening a bureau in Pyongyang. According to Journalism.co.uk:

The Associated Press is to open a bureau in the North Korean capital Pyongyang, following an agreement with state news agency KCNA.

The new bureau will be the first permanent text and photo office operated by a Western news organisation in the North Korean capital. It follows the opening of an AP television office in the city five years ago.

Run by a notoriously secretive regime, North Korea also has a poor press freedom record. It is ranked 177 out of 178 countries on the Reporters Without Borders press freedom index.

Under the new agreement, AP will have exclusive global distribution of video content from the KCNA archive. The agreement has been negotiated over the past few months, with KCNA president Kim leading a delegation of executives to AP’s New York headquarters.

In March, chief executive Tom Curley and executive editor Kathleen Carroll were part of a delegation that traveled to Pyongyang.

Curley heralded the agreement as “historic and significant”.

“AP is once again being trusted to open a door to better understanding between a nation and the world. We are grateful for this opportunity and look forward to providing coverage for AP’s global audience in our usually reliable and insightful way.”

UPDATE 1 (2011-3-10): According to Yonhap, the AP is once again asking to open a bureau in Pyongyang:

Thee Associated Press (AP), one of the main news agencies in the U.S., has asked North Korean authorities to help it open a bureau in Pyongyang, a news report claimed Thursday.

Itar-Tass, a Russian news agency, reported from the North Korean capital that a delegation for AP, headed by its president and CEO Thomas Curley, made the request during its ongoing visit to Pyongyang.

Citing an informed Korean source, Itar-Tass reported that the AP delegation said opening a Pyongyang bureau “would make it possible to create in the United States an objective and truthful picture of events” taking place in the communist regime.

“However, there is no clarity so far on the issue of opening of the AP office,” the source was quoted as saying.

North Korea’s state media reported briefly on Tuesday of the arrival of the AP delegation, but didn’t elaborate on why AP was visiting and how long its delegation would stay.

A source in Seoul had earlier told Yonhap News Agency that Curley is scheduled to stay in Pyongyang until Friday and his visit may be aimed at trying to set up a news bureau in the reclusive state.

Among foreign news agencies, only Itar-Tass and China’s Xinhua have bureaus in Pyongyang, while a journalist from the People’s Daily newspaper of China is also based there.

Itar-Tass on Thursday said officials from Reuters, the London-based news agency, also visited Pyongyang earlier with a similar request.

AP Television News, the international video division of AP, opened a full-time office in Pyongyang in 2006, making it the first Western news organization to establish a permanent presence in North Korea. The Pyongyang office of APTN currently provides only video images.

Below is a report I posted in 2006 on the opening of the APTV office in Pyongyang.

ORIGINAL POST (2006-5-23): The Assoicated Press Television News is opening an office in Pyongyang. According to the Joong Ang Daily :

AP Television News, a British-based agency, opened a full-time office in North Korea yesterday, with three North Koreans to be on the permanent staff, said Toby Hartwell, marketing director of APTN in London.

With the bureau, the television service becomes the first Western news organization to provide regular coverage from the reclusive country.

The bureau’s staff will be recruited from the North’s state-run media. International staff from APTN will have frequent access to the country and work with them, Mr. Hartwell said.

Mr. Hartwell said APTN has been given access to the country, and he believes that will continue.

APTN is the international video division of the Associated Press. It delivers video content of breaking global news to broadcasters around the world.

Posted in Associated Press, Communications, Domestic publication, Foreign direct investment, Ministry of Post and Telecommunications | 2 Comments »

North Korean Economy Watch