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Exchange rate data

Wednesday, April 6th, 2011

The The UN World Food Prgram’s Rapid Food Security Assessment Mission (RFSA) offered some exchange rate data that I thought was worth pointing out:

Currently the official exchange rate is about USD1=KPW100 yet the market rate is closer to USD1=KPW3000. In other words, the redenomination of the national currency that occurred in November 2009 is all but neutralized. The effects of this policy on ordinary citizens appear to be mixed where people with over KPW 100,000 lost their savings. The purpose of such a policy was to control inflation by reducing money supply and to curb the growth in private enterprise. Worker salaries remained the same, but prices were reduced significantly.

The PDS prices were revised downwards in the wake of the currency revaluation making it even more affordable, at least in principle. For example, PDS prices of rice declined from KPW 44 to KPW 24 per kg and maize declined from KPW 24 to KPW 14. At these low prices the issue is the lack of commodities in the market, rather than consumers lacking money to purchase them.

An average worker makes around KPW 3,000 to KPW 4,000 per month. This translates into a dollar per month which only works in DPRK because everything is heavily subsidized and ordinary citizens do not rely on direct purchases of imported commodities. If PDS were to run out of cereals at the end April, people would not have the means to purchase cereals on the black market, where prices are KPW2000 per kilogram of rice and about KPW 1000 for maize. It is highly doubtful that the barter system which is the backbone of this informal economy will be able to withstand a shock of this magnitude over more than a couple of weeks. A humanitarian crisis is the likely outcome of such a series of events.

Posted in Banking, Black markets, Economic reform, Finance, Fiscal & monetary policy, Food, Price liberalization, Public Distribiution System (PDS) | Comments Closed

Some recent material on DPRK markets

Wednesday, March 30th, 2011

First, Kim Song Min (김성민), founder of Free North Korea Radio, has posted another clandestine video of a North Korean market:

You can (probably) see the ten-minute video here. It will not work in China. Again, the market is surprisingly ordinary; lots of fish, potatoes, and greens.

I posted a similar video several weeks ago which you can see here.

Secondly, the March 24th WFP/FAO/UNICEF Rapid Food Security Assessment Mission (PDF of the report here) included some interesting information on the DPRK’s markets:

5.2. Markets
The mission had unprecedented access to markets in the country. All teams spent a considerable amount of time surveying different markets and their attributes. In DPRK there are three main types of markets where people can buy food and non-food stuff: 1) State Shops; 2) Farmer’s Markets; and 3) City Markets.

State Shops
State Shops are open seven days a week to provide families with such essentials like the soyabean sauce, soya-bean paste, and cooking oil at discounted prices. Each household is assigned to a state shop and, for certain commodities, is entitled to a monthly quota that is set by the Ministry of Commerce. Essential food items include: soya-bean sauce (50 grams /person/day); soya-bean paste (30 grams/person/day); and cooking oil (20 grams/person/day).

Whether households can purchase their full allocation primarily depends on availability. For example, many households reported that soya-bean oil has not been available since early February. Others households informed that meat is only available on special occasions like the New Year or the birthdays of Kim Il Sung (15 April) and Kim Jong Il (16 February).

The Peoples Neighborhood Unit (PNU) [Inminban] announces when new supplies arrive and informs the household’s entitlement. Payment is collected from the households and tokens are issued, specifying items and quantities that can be collected from the state shops.

The variety and quantity of food and non-food commodities varies from county to county. Some shops were observed to have other food items for sale, such as wild vegetables, biscuits and salt. The mission observed that State Shops in rural areas have fewer commodities available than those in large urban centres.

The mission also observed non-food commodities in State Shops, including: school supplies, clothes, shoes, blankets, kitchen utensils, ceramics, cigarettes, beer, rice wine, children’s toys, and single-band radios.

Farmers Markets
The Farmers’ Markets occur every ten days or three times each month. Sellers bring their food and non-food produce to the market where they pay a fee of KPW10 to secure a two meter stall for the day. The sale of cereals is officially prohibited. The mission did not observe any cereals being sold. The main food items observed in these markets were vegetables, potatoes, fruits, eggs, meat, fish, lentils and spices. Non-food items included basic farming equipment, woven baskets, school supplies, clothes, knitted socks and gloves.

Any exchange of cereals between households is privately done through barter trade or households who are PDS [Public Distribution System] dependants get cereals as gifts from relatives and friends in Cooperative farms. The surplus cereal produced by the farmers over and above their grain allocation for home consumption has to be sold to the State Food Procurement Agency.

Some sellers were able to quote terms of barter trade including: two kilograms of maize can be exchanged for one kilogram of rice; one kilogram of fish can be exchanged for one kilogram of rice; one-half kilogram of pork meat can be exchanged for one kilogram of rice; and five eggs can be exchanged for one kilogram of rice. Sellers were hesitant to quote rice and maize prices in KPW other than what is paid through the PDS.

Interestingly sellers only brought commodities in small quantities despite the fact that these markets happen only three times a month. The number of sellers out numbered the buyers but that could be the mission effect as people were wary of foreigners asking questions, particularly outside Pyongyang. The difference in the prices paid in these rural markets compared to Tongil market in Pyongyang was astounding. A bundle of spinach that cost KPW 20 in rural market was being sold for KPW 1000 in Tongil market—50 times more. However, this may not be of concern to ordinary citizens as Tongil caters more to the foreigners and DPRK elite.

City Markets
City markets are held daily in cities and often in the same structures as the farmers markets.Mission members did not observe any cereals for sale in the market. Food items observed were potato, vegetables, pulses, wild vegetables, seafood, fish, eggs, and meat, including rabbit, chicken, and duck. Non-food items included farming tools, baskets, brooms, school supplies, clothing, and other household items. Commodities were available in small quantities speaking to the size of the market. The prices in these markets were competitive and the produce similar to the farmers market.

Finally, Yonhap reports on the travels of a British Envoy to the DPRK:

Martin Uden, Britain’s ambassador to South Korea, said Sunday that a marketplace in Pyongyang, the capital of North Korea, appear to be stocked with large amounts of food, poultry and electronic products, despite the communist state’s ongoing search for food aid abroad.

Uden, who traveled to Pyongyang and Wonsan, a port on North Korea’s east coast, from March 11-14, said he witnessed plenty of chicken, fish and vegetables and an array of computer and camera accessories during his visit to the “Dong-il” market in the capital city.

In his travelogue that was written after his second trip to the North following the first in 2008 and sent to Yonhap News Agency, Uden said that overall, both the variety and quantity of food products available at the Pyongyang market were a “fair bit less” compared with three years ago, noting the absence of beef was especially noticeable.

“This March, I saw no beef and a tiny amount of pork. But plenty of chicken of all sizes, both cooked and uncooked, and some duck. Large amounts of good-looking fish and plentiful root vegetables,” the British diplomat said in his travelogue that offers insights into the daily life of ordinary Pyongyang citizens.

“In terms of the food aid that the DPRK is seeking at present, it’s worth remembering that even if this one market appeared reasonably stocked, it’s not possible to draw wider conclusions from that,” he said, using the abbreviation of the North’s official name.

Uden said he arrived in Pyongyang on the second Friday of March, the day of a devastating earthquake and tsunami in Japan, but was kept in the dark about the disaster until Monday, when the state news organizations carried reports about it. He called the incident an eloquent example of information control by the government.

“In (North Korea), you can only know what the state wants you to know,” he said.

The full text of his travelogue can be found here.

Posted in Food, General markets (FMR: Farmers Market), Public Distribiution System (PDS) | Comments Closed

The heads of the Central Bank and State Price Commission appointed

Wednesday, March 16th, 2011

Institute for Far Eastern Studies (IFES)
NK Brief No. 11-03-15
3/15/2011

Recently, Paek Ryong Chon was appointed as the new President of the Central Bank of the DPRK. Paek is known as the third son of late Paek Nam Sun, the former Foreign Minister of the DPRK.

According to the DPRK’s official news agency KCNA, a national meeting of commercial officials was held at the People’s Palace of Culture in Pyongyang on March 7, 2011. The list of attendees at this event included Paek Ryong Chon as the President of the Central Bank.

The senior Paek served as the Foreign Minister of the DPRK from 1998 to 2007 before he passed away in January 2007. His third son, Paek Ryong Chon, 49, made his public political appearances at the North-South Premier Talks and the Joint Committee for Inter-Korean Economic Cooperation meetings in Seoul on December 2007 as a department director of the Secretariat of the Cabinet.

Previously, he visited South Korea as a part of the North Korean delegation in 2002 at the first working-level talks of inter-Korean economic cooperation and again in June 2006 for the Inter-Korean Joint Event held in Kwangju.

The Central Bank was established in 1946 and is responsible for issuing bank notes, currency control and regulating other banks. The Central Bank also operates as a savings and insurance institution that provides services for the general population of North Korea through regional branch offices.

Paek’s new appointment is believed to be largely in consideration for the late foreign minister, Paek Nam Sun.

Meanwhile, Ryang Ui Gyong was appointed as the Chairman of the State Price Commission, which was formerly known as the State Price Bureau.

The KCNA made a referral to Ryang Ui Gyong as the Chairman of the State Price Commission in a recent report on a national meeting of commercial officials.

Not much is known about Ryang. He is speculated to have built his career in the State Price Bureau as a technocrat.

The State Price Commission is responsible for the price control of agricultural and industrial prices and wage systems, calculating the living costs for the people. The recent upgrade from a bureau to a commission is analyzed by many experts as North Korea’s move toward stronger price control policy to stabilize prices.

The Commission is also in charge of regulating import and export prices twice a year. This is evaluated as an attempt to prevent imports from being imported at a higher price and exports from being exported at a lower price than the international market average.

In the past, the State Planning Commission and the State Science and Technology Commission were the two main commissions in North Korea. However, since June 2010, the number of commissions has risen to five, a result of the reorganization of the Ministry of Education to Education Commission, the Joint Venture and Investment Guidance Bureau to the Committee of Investment and Joint Ventures, and the State Price Bureau to the State Price Commission.

Posted in Agriculture, Central Bank, Institute for Far Eastern Studies, Inter-Korean Economic Cooperation Committee, Labor conditions/wages, State Fiscal and Financial Committee, State Price Commission | Comments Closed

DPRK central bank raises deposit rates and eases access to money

Sunday, March 6th, 2011

UPDATE: For the second time in as many weeks, the DPRK’s central bank makes the news. According to KCNA:

A national meeting of commercial officials took place at the People’s Palace of Culture on Monday.

The meeting reviewed the gains and experience made in the past commercial service and discussed tasks and ways for improving this work.

Present there were Premier Choe Yong Rim, Minister of Light Industry An Jong Su, Minister of Foodstuff and Daily Necessities Industry Jo Yong Chol, Chairman of the State Price Commission Ryang Ui Gyong, President of the Central Bank Paek Ryong Chon and other officials.

According to Yonhap, Paek Ryong Chon is the third son of the late foreign minister Paek nam-sun.

ORIGINAL POST: A big hat tip to Chris Green who translated an interesting article on recent changes to DPRK banking regulations. The original article in Korean is here.

According to Chris’ translation of the article:

The Chosun Central Bank is said to have raised interest rates by 1.8 times. Customers are also now able to get instant access to their money. As a result, the bank’s total deposits are also said to be growing.

These measures appear to be the bank coming forward to guarantee deposits given that people have been unwilling to put their money there since the 2009 currency redenomination.

North Korea watchers are observing the situation, saying that there is a chance that measures like these could be an indicator of financial sector reform.

Speaking on the 1st, one such source said, “I hear that the number of people putting their money in the bank is growing. The total reserves of the Chosun Central Bank are also growing. The causes of this are that access to withdrawals has recently been freed up and the interest rate has risen steeply.” According to the source, the interest rate offered by the bank was previously 3%, but has recently risen to 5.4%.

The Chosun Central Bank is a government entity under the Cabinet, doing the job of both a central and commercial bank at the same time. It offers savings, loans and insurance services.

North Korean people can deposit money there and earn interest on it; in this, it is much the same as the Post Office, which also takes deposits and gives interest.

In terms of allocation in North Korea, the state does it by force, and there are also cases of deposits being coerced. Indeed, until now it has been hard for North Korean people to recover capital deposited with the bank.

The source explained, “At times when the economic situation has been bad, it has not just been hard to get interest, it has even been common to illegally have to give 20% of the value of the capital to Central Bank management and then take the rest,” but added, “Recently, North Korean people have been able to get hold of their deposits surprisingly easily, and the rumor ‘We can get our money! And the interest has gone up!’ is going around.”

Cho Byung Hyun of the Industrial Bank of Korea’s research institute explained more, saying, “Following the failure of the 2009 currency redenomination, people disliked putting their money in the bank so, for the circulation of money, the bank instituted a policy of allowing instant access to deposits and raising interest rates.”

North Korea suffered serious fallout from the currency redenomination, including rapidly rising prices and the execution of its architect, former Workers’ Party financial planning head Pak Nam Gi.

However, it is also possible in part to interpret the failed redenomination as an opportunity to activate capitalist banking practices.

Cho went on, “We know North Korea has recently been preparing financial reforms. At the moment, banks under existing trade banks etc are controlled by the Central Bank, but this can be seen as propelling reform in the direction of giving independence to each bank.”

Meanwhile, Professor Lee Sang Min of Joongang University economics department pointed out, “This can be seen as helping with the introduction of a capitalist system in North Korea in the long term. It is an opportunity for the North Korean people to learn about a capitalist banking system.”

However, it is as yet too early to see this sort of phenomenon as meaning that the financial system of North Korea is settled. As one defector pointed out, “For this to develop into a system, the North Korean authorities shall have to spend a long time building trust.”

Another North Korea source added, “The dollar tended to be thought of by the North Korean people as the standard currency, but the Yuan is gradually moving to center stage.” This is analyzed by experts as being down to recent economic exchanges between the North and China and the rising value of the Yuan.

Fascinating stuff. Thanks for posting, Chris.

I am actually looking for information on the DPRK’s monetary system, so if you have any good papers, please send them my way.

Posted in Banking, Central Bank, Finance, Fiscal & monetary policy, State Fiscal and Financial Committee | Comments Closed

Increase in DPRK’s mineral resources exports to China expected again for this year

Monday, February 28th, 2011

Institute for Far Eastern Studies (IFES)
2/24/2011

The trade volume between North Korea and China has steadily increased, reaching its record high of USD 3.4 billion in 2010. Total exports amounted to 1.19 billion USD while imports doubled that figure to USD 2.22 billion. Imports have continued to grow, increasing by 2.4 times over the previous year.

Since the Cheonan incident and the implementation of May 24 sanctions, inter-Korean economic cooperation has come to a halt, naturally resulting in rise in exports to China. In particular, a significant growth in anthracites exports was observed. The monthly anthracites exports that averaged around USD 10 million surpassed USD 70 million mark last August and maintained USD 50 million monthly average between September to November. In addition, cost-per-ton of anthracite in March which was USD 52.2, jumped to USD 82.8 in November, a climb of 60 percent. This boost is attributed to its increased export.

The current supply of electric power consists mostly of hydroelectric power — reaching over 60 percent– but during the winter season most of the hydropower plants are unoperational due to frozen facilities from harsh winter weather. Anthracites were the alternative resource to fill this gap. Sacrificing power production and exporting great amount of anthracites despite severe winter is a strong indication of the poor foreign currency situation in North Korea.

In its New Year’s joint editorial, North Korea placed heavy emphasis on its anthracite export that took up 60 percent of its total exports. In the statement, four vanguard sectors of coal, electricity, metals, and railroads were highlighted as important industries as “rich underground resources that will help with securing funds and resolving raw material problems.” This is the first time in 13 years – that is, since the Arduous March — for coal to be mentioned first in the New Year’s message.

North Korea also began to lift export restraints of mineral resources like coal and silver from the latter half of last year and ordered to increase imports of rice and corns in place of minerals.

The reason food procurement is placed first at the expense of its mineral resources is believed to be associated with the implementation of the succession involving Kim Jong Un, and to keep North Korean people’s dissatisfaction under control and manage the domestic situation.

North had placed restraints on coal, gold, silver, lead, and zinc exports from 2007 through adopting export control of mineral resources.

In addition, North Korea and China will meet in Beijing to sign an agreement on joint development of underground resources. This agreement will include Musan Mine and rare-earth mines that POSCO (The Pohang Iron and Steel Company of South Korea) has shown interest in in the past for development. China’s moves in this sector are suspected as China’s attempt to monopolize the DPRK’s underground resources.

The DPRK’s Joint Venture and Investment Guidance Bureau and China’s Ministry of Commerce were expected to meet on February 15 to discuss agreements related to underground resources development. On the agenda was Musan Mine, abundant in gold and anthracite, and other mines rich in rare-earth elements. Other mines are also known to be specified in the agreement.

China is expected to bring private companies into the underground resources development project after reaching an agreement with the DPRK. According to our source, “both parties will establish a joint venture investment corporation in Hong Kong after signing the agreement.”

Construction of a highway connecting Heilong City of Yanbian Korean Autonomous Prefecture to Nampyong and Chongjin of North Korea and railway system linking the cities of Heilong, Nampyong, and Musan are currently underway, expected to be in operation by end of this year. Jilin Province and Ministry of Railways of China began construction of this railway system from October 2010 investing CNY 1.19 billion, which runs a distance of 41.68 km. However, it is expected to extend further onto Chongjin and is considered to become the major transportation hub, integrating economic cooperation between the two countries.

Musan Iron Mine is known as the largest outdoor iron mine in Asia and Tonghua Iron and Steel Group along with three other Chinese corporations acquired 50-year development rights of Musan Iron Mine. They are bringing in about 120 tons of iron ore each year and more is expected to be brought in once the Heilong-Musan rail link is completed.

Posted in Automobiles, China, Coal, Copper, Dams/hydro, Energy, Gold, Graphite, International trade, Joint Venture Investment Committee (JVIC), Mining/Minerals, Statistics, Trade Statistics, Transportation | Comments Closed

Office 38 reportedly back in business–and other changes

Sunday, February 20th, 2011

UPDATE 4 (2/20/2011): Kim Tong-un (김동은) named Kim Jong-il’s fund manager. According to Yonhap:

A senior official of North Korea’s ruling party has been named to lead a special party bureau, code-named Office 38, that oversees coffers and raises slush funds for its leader Kim Jong-il and the ruling elites, a source on North Korea said Sunday.

Kim Tong-un, formerly head of Office 39 in the Workers’ Party of Korea, assumed the post in May last year, when North Korea revived Office 38, which was merged with Office 39 in 2009, the source said on condition of anonymity. Office 39 is believed to be another organ that governs a wide network of business operations both legal and illegal.

Both Offices 38 and 39 belong to the Secretariat of the Workers’ Party, which Kim Jong-il chairs, according to a diagram of the North’s power structure released by the Unification Ministry, which handles inter-Korean affairs. Last year, the ministry had only included Office 39 in a similar diagram.

In a meeting with reporters last week, a ministry official said Office 38 has been spun off from Office 39 and is now running on its own again. The official, who would speak only on the condition of anonymity citing the sensitive nature of his comments, described “a stream of information” that has come through since mid-2010.

Office 38 mainly oversees transactions involving foreign currency, hotels and trade, the official said, while Office 39, headed by Jon Il-chun, drives revenue by dealing in narcotics, arms, natural resources and others.

The North’s revival of Office 38 is interpreted as an effort to cover the increasing cost of leader Kim Jong-il’s ceding of power to his youngest son, Jong-un.

The story was also reported in Yonhap.

UPDATE 3: Here are links to the Ministry of Unification‘s English language organization charts of the North Korean leadership in which some of the changes mentioned below are listed (though not all): Workers’ Party, State Organs, Parties and Organizations

UPDATE (2/15/2011): According to the Daily NK:

The number of Special Departments under the Secretariat of the Chosun Workers’ Party has been increased from 18 to 20, a move that includes the revival of the No. 38 Department, which previously served as Kim Jong Il’s private bank vault, and the foundation of a film department.

The Ministry of Unification revealed the news yesterday in its 2011 North Korean Power Structure and Index of Figures, Agencies and Organizations. It incorporates North Korean changes from December, 2009 up to the present day, completed after consultation with relevant agencies and experts.

The revival of the No. 38 Department and founding of a film department

The report states, “The No. 38 Department, which was merged with the No. 39 Department in 2009, was spun off again last year. Kang Neung Su, who was appointed Deputy Prime Minister in June of 2010, was introduced as head of the film department at the same time. The exact foundation date of the film department is unknown; however, it appears to be newly established.”

No. 38 and No. 39 Departments are directly controlled by Kim Jong Il and serve as a private vault for his ruling funds. The No. 38 Department manages hotels, foreign currency stores and restaurants etc, while illegal weapons trading through foreign trade companies, the smuggling of gold, illegal trade in drugs and the distribution of counterfeit dollars, so-called supernotes, are handled by the No. 39 Department.

“They combined two offices which had different functions, and it appears that this did not result in the intended efficiency,” a knowledgeable source commented.

Meanwhile, on the establishment of a film department, the source added, “North Korea’s cultural art is a political means by which to carry out Party policy and a policy tool to implant policy in the North Korean citizens.”

Among the reshuffled special departments, the existing ‘Munitions Industry Department’ has been renamed the ‘Machine Industry Department’, and the ‘Administration and Capital Construction Department’ has been scaled back to simply ‘Administration Department’.

Elsewhere, the existing National Resources Development and Guidance Department under the Ministry of Extractive Industries has been promoted to National Resources Development Council and, as reported, the Joint Investment Guidance Department rose to become the Joint Investment Committee, while the National Price Establishment Department became the National Price Establishment Committee. Again, as reported, the ‘People’s Safety Agency’ under the Cabinet became the People’s Safety Ministry under the National Defense Commission, while the Capital Construction Department was downsized to become the General Bureau of Capital Construction.

The Central Court and Central Prosecutors Office were also renamed the Supreme Court and Supreme Prosecutors Office respectively.

The Ministry of Unification report also notes that North Korea added Nampo City to its list of eleven cities and provinces, increasing the total number to twelve.

The newly designated Nampo City includes five former parts of South Pyongan Province; Gangseo, Daean, Oncheon, Yonggang, and Chollima districts. Previously, Nampo was under the direct control of the central government as part of South Pyongan Province proper.

At the same time, North Korea also transferred the existing Kangnam-gun, Joonghwa-gun, Sangwon-gun, and Seungho-district, all formerly southern sections of Pyongyang City, to North Hwanghae Province.

Military Commission placed under the Central Committee of the Party

The relationship of the Central Committee and Central Military Commission, which was formerly said to be in parallel, has been changed, reflecting the idea that the Military Commission is now under the Central Committee of the Party.

The Ministry of Unification commented, “By revising the Party regulations, the Central Military Commission and Central Committee were marked as parallel in 2009 and 2010. However, after confirming the revised Party regulations at the Chosun Workers’ Party Delegates’ Conference on September 28th last year, this relationship was adjusted, and an election is now held for the Central Military Commission via a plenary session of the Central Committee.”

Also, the ‘Bureau of General Staff’ under the National Defense Commission was judged to be below the Ministry of the People’s Armed Forces, but is now shown to be in a parallel relationship with the Ministry of the People’s Armed Force and ‘General Political Department’.

ORIGINAL POST (2/14/2011): According to Yonhap:

North Korea has revived a special party bureau, codenamed Office 38, that oversees coffers and raises slush funds for its leader Kim Jong-il and the ruling elites, South Korea said Monday in its annual assessment of the power structure in the communist country.

In 2009, the bureau had been merged with Office 39, another organ that governs a wide network of business operations both legal and illegal, according to the Unification Ministry in Seoul.

In a meeting with reporters, however, a ministry official said Office 38 has been spun off from Office 39 and is now running on its own again. The official, who would speak only on the condition of anonymity citing the intelligence nature of his comments, cited “a stream of information” that has come through since mid-2010.

The official would not elaborate on how the information has been obtained, only saying the ministry works closely with “related government bodies” to outline the North’s power structure.

Office 38, whose chief remains unknown, mainly oversees transactions involving foreign currency, hotels and trade, the official said, while Office 39, headed by Jon Il-chun, drives revenue by dealing in narcotics, arms, natural resources and others.

A source privy to North Korea matters said the spin-off suggests that North Korea has been experiencing difficulties in earning foreign currency since merging the two offices.

“Efficiency was probably compromised after the two, which have different functions, were combined,” the source said, declining to be identified citing the speculative nature of the topic. “More importantly, it seems related to the current state of foreign currency stocks. The North is apparently trying to address those difficulties.”

In August last year, the United States blacklisted Office 39 as one of several North Korean entities to newly come under sanctions for involvement in illegal deeds such as currency counterfeiting.

North Korea is also believed to have been hit hard financially after South Korea imposed a series of economic penalties last year on Pyongyang when the sinking of a warship was blamed on it.

Both Offices 38 and 39 belong to the Secretariat of the Workers’ Party, which Kim Jong-il chairs, according to a diagram of the North’s power structure released by the Unification Ministry. Last year, the ministry had only included Office 39 in a similar diagram.

Both offices have often been referred to as Kim Jong-il’s “personal safes” for their role in raising and managing secret funds and procuring luxury goods for the aging leader.

Read the full story here:
North Korea Splits No. 38 and 39 Departments Up Again
Daily NK
Kim So Yeol
2/15/2011

N. Korea revives ‘Office 38’ managing Kim Jong-il’s funds: ministry
Yonhap
Sam Kim
2/14/2011

Posted in Administration Department, Banking, Bureau 38, Bureau 39, Film, Finance, Fiscal & monetary policy, General Bureau of Capital Construction, International trade, Joint Venture Investment Committee (JVIC), Machine Industry Department, Ministry of People’s Security (Criminal Police), National Price Establishment Committee, National Resources Development Council, Secretariat, Supreme Court | 1 Comment »

KJU supporter takes over Rajin-Sonbong (Rason)

Monday, February 14th, 2011

According to the Donga Ilbo:

North Korea has reportedly appointed Vice Trade Minister Jo Jong Ho as chairman of a civic committee for Rajin-Sonbong Special City, a major post in the North, to succeed Kim Su Yol, who was dismissed late last year.

Jo is a member of a group that supports Kim Jong Un, the youngest son of North Korean leader Kim Jong Il and heir apparent, and reportedly has helped set the North’s new economic policy.

A source on North Korean affairs said Sunday, “Jo Jong Ho has been named the new chairman of the people’s committee, a post which has remained vacant after the dismissal of former chairman Kim due to sluggish foreign investment.”

“Since Jo used to work with former Trade Minister Im Kyong Man, chief secretary of the ruling Workers’ Party for Rason City, he will likely enjoy a harmonious working relationship with Im.”

Pyongyang has apparently deployed a key member of the power elite among supporters’ groups of Kim Jong Un to an important economic region to lay the foundation for a successful power succession based on economic achievements.

The source said, “The North deployed a Kim Jong Un supporter at a time when Pyongyang is striving to establish the structure for power succession,” adding, “Since Jo is fluent in English, activities to attract foreign investment from overseas enterprises will likely gather momentum.”

Read the full story here:
NK appoints heir apparent`s supporter to key post
Donga Ilbo
2/14/2011

Posted in Ministry of Foreign Trade, Rason Economic and Trade Zone (Rajin-Sonbong), Special Economic Zones (Established before 2013), Worker's Party | Comments Closed

DPRK to distribute light industrial goods to the people by April 2012

Sunday, February 13th, 2011

Institute for Far Eastern Studies (IFES)
NK Brief No. 11-02-08
2011-02-08

In last month’s New Year’s Joint Editorial, North Korean authorities reaffirmed the national drive to strongly develop the country’s light industrial sector by 2012, the 100th anniversary of the birth of Kim Il Sung. On February 2, the Choson Sinbo, the newspaper of the pro-North Korean residents’ league in Japan, proclaimed that all efforts were being focused on delivering high-quality light industrial goods by April of next year.

North Korea’s minister of light industry, forty-seven year old Hu Chul San, was interviewed by the paper’s Kook Jang Eun. Hu stated that light industrial zones already in operation would be further bolstered and the provision of raw materials would be prioritized for celebrations surrounding the 100-year birthday of the country’s founder.

The North Korean regime has set 2012 as the year in which it will “open the doors to a great and prosperous nation,” and Kim Il Sung’s April 15 birthdate has been set as the first target for economic revival. Just as in 2010, this year’s Joint Editorial called for light industrial growth and improvements in the lives of the North Korean people as the ‘strong and prosperous nation’ goal is pursued.

Minister Hu gave one example of the expected boost in production, stating that all students, from elementary school to university, would receive new school uniforms by next April. “Originally, school uniforms were issued to all students once every three years, but as the nation’s economic situation grew more difficult, [the regime] was unable to meet the demand.” He promised that for the 100-year anniversary, “Rationing would take place as it did when the Great Leader was here.”

The minister also explained that all preparations for distributing light industrial goods to the people next April needed to be completed by the end of this year, since Kim Il Sung’s birthday fell so early in the spring. He stated that a strong base had already been established for the production of high-quality goods, and that many organizations had already mass-produced high-quality goods for the celebration of the 65th anniversary of the Korean Workers’ Party founding last year, offering the Pyongyang Sock Factory, the Sinuiju Textile Mill, the Botong River Shoe Factory, and the Pyongyang Textile Mill as examples.

When asked how North Korea would resolve raw material shortages, the minister explained that since the February 8 Vinalon Complex began operations last year, Vinalon and several other types of synthetic materials were available. The Sunchon Chemical Complex and other industries were also providing synthetic materials to light industrial factories throughout the country, strongly supporting indigenous efforts to increase production. He added, “Raw rubber, fuel and other materials absent from our country must be imported,” but that “national policies were being implemented” to ensure steady supply.

Minister Hu admitted that there was no shortage of difficulties, but that every worker was aware of the importance of meeting the April deadline, and that because raw material shortages were being resolved, light industries were now able to press ahead with full-speed production.

Posted in 2012 Strong and Prosperous Nation (Kangsong Taeguk), Clothing, DPRK Policies, Kim's New Year Address (Joint editorials), Light Industry, Manufacturing, Ministry of Light Industry | Comments Closed

KPA in charge of fulfilling 2012 Pyongyang construction

Wednesday, February 9th, 2011

According to the Joongang Daily:

North Korea’s leadership wants “renovations” of its capital city of Pyongyang, a South Korean government source said yesterday, and much of the so-called renovations will reflect the rising power of the military.

The source said that leader Kim Jong-il and heir-apparent Kim Jong-un had given orders to hand the Ministry of Capital City Construction Development over to the military.

The source also said military men took over key positions in the ministry.

The modernization of the capital is a long-term project that began in 2001. The Ministry of Capital City Construction Development was included in the cabinet in that year.

In 2006, Kim Jong-il’s brother-in-law Jang Song-thaek, often called the second-most powerful man in North Korea, took charge of the ministry.

It is unclear, however, whether Jang will continue to head the ministry after the military takes over.

The change is being seen as part of North Korea’s often stated goal of becoming a “strong and prosperous country” by 2012.

That will also include improving Pyongyang and the economy as a whole, with the military controlling much of the activity.

Temporary youth brigades were mobilized last September to help with construction throughout the country. They were assigned to military brigades as regular soldiers.

North Korea analysts have said that the change in the ministry was for “mobilization and stronger control.”

“North Korea has recently stopped calling laborers and farmers the ‘leaders of the revolution,’ and said the soldiers are,” said Jung Chang-hyun, a professor of North Korean studies at Kookmin University in Seoul.

“Assigning civilian groups to the military means that the leadership aims to mobilize the people and gain effective control to create a strong and prosperous country by next year,” Jung added.

Kim Jong-il said in October 1996, during a speech honoring the 50th anniversary of Kim Il Sung University: “Only the military can be trusted.”

Kim’s reliance on the military and the mobilization of civilians into the military reflects his songun, or “military-first,” ideology.

The moves also aim to solidify Kim Jong-un as the next leader of North Korea, with his name on the orders along with his father’s. If the projects improve people’s lives, the positive results can be attributed to Kim Jong-un, said Lee Jo-won, professor of political science at Chung-Ang University in Seoul.

The number of facilities in Pyongyang that have been renovated over the past 10 years are too numerous to mention here. Most showcase factories, schools, theaters and restaurants have been renovated. Some more than once.

Additionally, the North Korean government has sought to boost the quantity of housing in the city. A high-profile project near the Potonggang Gate has already been completed, and labor units are busy trying to complete 100,000 new housing units by next February.

Here are previous posts on: Real estate and Construction.

Read the full story below:
Kims want to ‘renovate’ Pyongyang for people
Joongang Daily
Jeong Yong-soo
2/9/2011

Posted in 2012 Strong and Prosperous Nation (Kangsong Taeguk), Cabinet, Construction, DPRK Policies, Ministry of Capital City Construction Development, Real estate | 1 Comment »

North Korea increasing coal production – seeking to ease power shortages and boost exports

Wednesday, February 2nd, 2011

Pictured Above: Pongchon Coal Mine (Google Earth)

Institute for Far Eastern Studies (IFES)
NK Brief No. 11-01-18
1/28/2011

The DPRK Workers’ Party’s newspaper, the Rodong Sinmun, recently featured a front-page editorial urging the North Korean people to increase coal production. On January 26, the KCNA reiterated the call, reporting that the newspaper editorial highlighted fertilizer, cotton, electricity, and steel as products suffering from a lack of coal, and that “coal production must be quickly increased in the Jik-dong Youth Mine, the Chongsong Youth Mine, the Ryongdeung Mine, the Jaenam Mine, Bongchon Mine [Pongchon Mine] and other mines with good conditions and large deposits.”

The editorial also emphasized that “priority must be placed on the equipment and materials necessary for coal production,” and, “the Cabinet, national planning committee, government ministries and central organizations need to draft plans for guaranteeing equipment and materials and must unconditionally and strongly push to provide,” ensuring that the mines have everything they need. It also called on all people of North Korea to assist in mining endeavors and to support the miners, adding that those responsible for providing safety equipment for the mines and miners step up efforts to ensure that all necessary safety gear is available.

In the recent New Year’s Joint Editorial, coal, power, steel and railways were named as the four ‘vanguard industries’ of the people’s economy. Of the four, coal took the top spot, and all of North Korea’s other media outlets followed up the editorial with articles focusing on the coal industry. On January 15, Voice of America radio quoted some recent Chinese customs statistics, revealing that “North Korea exported almost 41 million tons of coal to China between January and November of last year, surpassing the 36 million tons exported [to China] in 2009.” It was notable that only 15.1 tons were exported between January and August, but that 25.5 tons were sent across the border between August and November.

North Korea’s coal exports to China earned it 340 million USD last year, making the coal industry a favorite of Pyongyang’s economic and political elites. Increasing coal production is boosting output from some of the North’s electrical power plants, while exports to China provide much-needed foreign capital. However, even in Pyongyang, where the electrical supply is relatively good, many houses lack heating and experience long black-outs. Open North Korea Radio, a shortwave radio station based in the South, reported on January 24, “As electrical conditions in Pyongyang worsen, now no heating is available.” Farming villages can find nearby timber to use as firewood, but because prices are so high in Pyongyang, even heating has become difficult. Some in the city even wish for rural lifestyles, just for the access to food and heat.

Posted in Cabinet, China, Coal, Domestic publication, Energy, Google Earth, International trade, Mining/Minerals, Planning and Fiscal Affairs (KWP), Railways, Statistics, Trade Statistics, Transportation | Comments Closed

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