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‘Private’ real estate rentals approved, DPRK real estate management law enacted

Thursday, May 20th, 2010

Institute for Far Eastern Studies (IFES)
NK Brief No. 10-05-19-1
5/19/2010

On November 11, 2009, North Korea enacted a ‘Real Estate Management Law’ consisting of six sub-sections and 47 articles. The new law revised the terms for sale and use of real estate, banning the unapproved rental of property and allowing the state to collect a ‘usage fee’ (rent). In addition to the law on real estate management, immediately after the North’s currency reforms at the end of last November, the government enacted or revised a total of 11 laws related to the economy, including the Food Administration Law, Agricultural Law, Goods Consumption Standards Law, and the Labor Law. This raises the question of whether the regime is strengthening its economic control mechanisms.

According to the Socialist Property Management Law of 1996, only ‘enterprises, institutes, and groups’ were allowed the use of properties, but the latest Real Estate Management Law includes individuals as those allowed to use property.

North Korea’s KCNA reported the enactment of the new law on real estate in the middle of last December, but only revealed that “basic issues of real estate’s registration and inspection, use and collection of rents are regulated,” while the more detailed contents were revealed in a three-part series of articles on the Real Estate Management Law that ran in the Minju Chosun, which was published by the Cabinet and Presidium of the Supreme People’s Assembly between March 17 and April 3.

In North Korea, where all real estate is property of the government, the sale or rent of properties between individuals or groups is, on principle, not possible, but after the July 1, 2002 Economic Management Reform Measure, the regime’s inability to provide housing led to significant growth in the size of the black market for real estate.

On a related note, during the 4th session of the 11th Supreme People’s Assembly, which opened in April 2006, a campaign to assess properties throughout the entire country and establish a system of rent was revealed, after which ‘property usage fees’ were included in the annual national budget.

Ultimately, the enactment of this law on real estate strengthens the state’s control over the socialist economy and over the country as a whole. From South Korea’s perspective, it appears the integrated land tax, property tax and other similar systems are North Korea’s attempt to prepare an important legislative precedent for expansion of the state coffers.

However, the portion of the newly-enacted Real Estate Management Law that really catches the eye is the authorization of ‘individuals’ to rent real estate. While it takes on the form of property leasing, it is also an expanded measure in that it permits individuals to use socialist property. Giving individuals the right to use real estate increases productivity and helps ease the North’s current economic woes.

According to the Minju Chosun, the new law “says one must not buy and sell real estate, and the nature and use of property cannot be changed without permission from the management authorities, so that property cannot be handed over to or lent to other organizations, enterprises, groups or individuals.”

The law also stipulates that a property rents will be paid to a ‘State Pricing Establishment Organization’, and that the intended use for the property must be registered, after which rents will be set in either goods or currency, and if rents are not paid in currency, they can be paid in kind.

In particular, this law stipulates, “Land is not to be abused or used in a way that makes it barren,” and that any historic or revolutionary landmark, or idolation of Kim Il Sung or Kim Jong Il must be thoroughly protected.

Through a special measure by the Cabinet, a National Real Estate Management Committee was established, and management offices and chains of command were established for the cabinet.

Posted in 2002 Economic reforms, Cabinet, National Real Estate Management Committee, Real estate, Real Estate Management Law | 2 Comments »

DPRK announces another SPA session

Wednesday, May 19th, 2010

According to Yonahp:

North Korea will open its rubber-stamp parliament for the second time in less than two months, a session analysts say is likely to be joined by leader Kim Jong-il who recently returned from a trip to China amid rising tension on the Korean Peninsula.

The communist state’s official media reported Tuesday the Supreme People’s Assembly (SPA) will convene on June 7, exactly a month after Kim returned from his summit meeting with Chinese President Hu Jintao in Beijing.

The last session, which was skipped by Kim, convened on April 9.

The 687-member assembly has not opened twice in one year since 2003. Even then, each session was held by a separate group of representatives, a Unification Ministry official here said.

“The (South Korean) government will closely monitor the upcoming session,” the official said, asking not to be named.

“This should be seen as an extraordinary session at an extraordinary time,” Paik Hak-soon, a North Korea researcher at the Sejong Institute, said. “Kim will likely be present to oversee it.”

Paik was referring to heightened tensions between the divided Koreas since a South Korean warship sank on March 26 near the western sea border with North Korea.

A ranking South Korean defense official said Tuesday investigators have found evidence that points to a North Korean attack on the 1,200-ton Cheonan. Forty-six of the ship’s crew members died when the ship split in half.

“The parliament will also declare its support for economic cooperation projects Kim has brought from China,” Paik said, adding that North Korea fears sanctions on it will tighten if Seoul and Washington conclude Pyongyang is to blame for the ship sinking.

Baek Seung-joo, a researcher from the Korea Institute for Defense Analyses, said Kim is likely to call for support for a power succession that has been secretly underway in Pyongyang.

“This will be much focused on domestic politics,” Baek said, discounting the significance of the meeting between the North Korean and Chinese leaders.

“We may see clear moves that indicate Kim’s third son is rising up the ladder,” he said, adding the ship sinking is unlikely to be a major topic as Pyongyang has already denied any link to the incident.

Pyongyang held its first session of the newly elected SPA last year, reappointing leader Kim Jong-il to another five-year term as head of the National Defense Commission, the highest seat of power.

A member of the 13-man commission was retired earlier this month due to his age, and Baek said that opens up room for a cascade of reshuffles that can help pave the way for a power transfer.

The coming session also comes as North Korea remains reluctant to return to stalled six-party talks on its nuclear weapons programs.

Pyongyang says it will rejoin the aid-for-denuclearization talks only if Washington agrees to launch separate talks toward a peace treaty to formally close the 1950-53 Korean War and the United Nations lifts its sanctions on the country.

The six-nation talks include the two Koreas, the U.S., China, Russia and Japan. Kim pledged to work with China to create “favorable conditions” for their resumption in his summit meeting in China, but Seoul and Washington say it depends on the outcome of the investigation into the ship sinking.

Cho Myung-chul, a North Korea researcher at the Korea Institute for International Economic Policy in Seoul, said the SPA may issue a statement denouncing any South Korean or U.S. moves linking the sinking to the North.

He noted that the U.S. Senate last week passed a resolution calling for a thorough probe of the incident, while South Korea will announce the results of a multinational investigation later this week.

“The SPA may announce measures and warning against South Korea and the United States,” Cho said.

Read the full story here:
N. Korea unexpectedly calls rubber-stamp parliament into session
Yonhap
Sam Kim
5/18/2010

Posted in Supreme Peoples Assembly | 2 Comments »

DPRK Economist: Currency reform caused instability

Wednesday, April 21st, 2010

Institute for Far Eastern Studies (IFES)
NK Brief No. 10-04-20-1
2010-04-20

Ri Ki Song, a professor at the Institute of Economics, a part of North Korea’s Academy of Social Sciences, acknowledged during an interview on April 18 that the North’s currency revaluation of last November had caused some instability to unfold across the country. Professor Ri emphasized during an interview in Pyongyang with Kyoto News, “there was some temporary unrest in some areas . . . but there was absolutely no social upheaval and unstable situations were immediately controlled.”

Professor Ri, in answering questions for the Japanese news agency, was the first North Korean to acknowledge the problems caused by the reform. Regarding foreign media reports of the currency reform, Ri stated that the articles did not reflect the reality of the situation, and that the reforms had not destabilized the North Korean society. These comments were in line with those he made on April 1, when he stated at an APTN press conference, “Many people outside of North Korea have been noisily prattling on about problems emerging during exchange rate fluctuations, but there is no social unrest of the kind they speak of.”

He explained that some instability had occurred because price controls and other measures had not immediately followed the revaluation, and that “markets did not open for a few days [after the currency reform],” acknowledging that preparations for the measures had been insufficient. He also explained that following the currency reform, North Korean authorities had taken steps such as reducing prices on some foods and slashing unproductive expenditures. The government also encouraged women to take up jobs in light industry and in the service sector, and repaired the transport system. In an effort to develop the economy in 2010, the North Korean government boosted the budgets for the light industrial sector by 10.1 percent, and that of agriculture by 9.4 percent.

Professor Ri went on to say that authorities had reduced the price of a kilogram of rice from 40 won to 24 won, had lowered the price of eggs to 8 won, and had cut the prices on cooking oil and soap, as well. He added that this trend will continue for the near future.

The currency revaluation, the first of its kind since 1992, was aimed primarily at increasing the value of the North’s money and harnessing inflation, but despite the reform, the government is still managing foreign exchange rates. While keeping exchange rates under control, Ri stated that authorities could still adjust the value of the won, depending on economic developments as well as other domestic and international conditions.

In both the APTN and Kyoto interviews, Professor Ri called foreign coverage of the North’s economic situation “exceptional,” and insisted that nothing was wrong with the DPRK economy.

Posted in Finance, Fiscal & monetary policy, Food, General markets (FMR: Farmers Market), National Academy of Science, Price liberalization, Revolt | Comments Closed

DPRK 2009, 2010 budgets

Friday, April 16th, 2010

According to KCNA:

Report on Implementation of 2009 Budget and 2010 Budget

Pyongyang, April 9 (KCNA) — Deputy Pak Su Gil, vice-premier and minister of Finance, delivered a report on the results of the implementation of the DPRK state budget for last year and its state budget for this year at the 2nd Session of the 12th Supreme People’s Assembly held on Friday.

According to the report, the state budget for last year was successfully implemented and, as a result, the state budgetary revenue was overfulfilled 1.7 per cent, an increase of 7 per cent over the previous year.

Ministries, national institutions, management bureaus and complexes overfulfilled the national plans for budgetary revenue and all provinces, cities and counties across the country also overfulfilled their plans for local budgetary revenue.

Last year’s plan for state budgetary expenditure was carried out at 99.8 per cent.

An investment from the state budget was focused on the development of metal industry while a huge financial allocation was made for the power and coal industries and the railway transport.

8.6 per cent more funds than the previous year were spent for capital construction and expenditure was increased for agriculture and light industry.

A 7.2 per cent greater financial disbursement than the previous year was made for the field of science and technology, surpassing the level of the latest science and technology in domains of space technology, nuclear technology and CNC technology and putting the key industries of the national economy on a high scientific and technological basis.

A large amount of fund went to the field of cultural construction and 15.8 per cent of the total state budgetary expenditure was spent for national defence.

The reporter said that the scale of revenue and expenditure in the state budget for this year has been set on the principle of improving the people’s standard of living to meet the requirements of the policy of the Workers’ Party of Korea on conducting a great offensive to bring about a decisive turn in the above-said work.

This year’s plan for state budgetary revenue is expected to grow 6.3 per cent over last year. The revenue from the profits of state enterprises, the main source of state budgetary revenue, is expected to go up 7.7 per cent over last year, that from the profits of cooperative organizations 4.2 per cent, that from the fixed asset depreciation 2.5 per cent, that from real estate rent 2 per cent and that from social insurance 1.9 per cent.

This year’s plan for state budgetary expenditure is expected to show an 8.3 per cent increase over last year.

The spending for the light industry is expected to go up 10.1 per cent, that for agriculture 9.4 per cent and that for metal, power and coal industries and railway transport 7.3 per cent as compared with last year.

The expenditure for the machine-building industry is expected to go up and an 8.5 per cent bigger financial allocation will be made for scientific researches and the introduction of new technologies.

A 6.2 per cent bigger financial disbursement than last year is expected to be made to more successfully enforce the popular policies, a proof of the advantages of Korean-style socialism centered on the popular masses.

15.8 per cent of the total state budgetary expenditure for this year is expected to be spent for national defence.

It is expected that a large amount of educational aid fund and stipends will be sent for the children of Koreans in Japan this year, too.

In order to successfully implement this year’s state budget, all domains and units of the national economy should work out enterprising and realistic business strategy and management strategy and tenaciously carry them out by relying on a high degree of mental power of the producer masses and thus fulfill the plans for budgetary revenue without fail, stressed the reporter.

And according to the Choson Ilbo:

North Korean leader Kim Jong-il can freely dispose of 20 percent of his country’s budget, a former secretary of North Korean Workers’ Party has said that. Hwang Jang-yop told the Asahi Shimbun, “Only 30 percent of the budget is spent on public services, while 50 percent is earmarked for military spending.” Hwang defected to South Korea in 1997.

Hwang was interviewed by the daily during his visit to Japan on April 4-8. “Kim Jong-il’s dictatorship is 10 times worse than his father’s. People have a painful life,” he said.

Asked if the North is likely to abandon its nuclear weapons program, he said, “There is no such possibility. But the North won’t use the weapons. They’re a means to maintain the regime.”

To the question why Kim’s eldest son Jong-nam was passed over for the succession, he said, “At first, Kim Jong-il thought of choosing his eldest son as his successor. But he seems to have changed his mind as he fell in love with Ko Young-hee, the mother of Jong-un, his third son, after Jong-nam’s mother Song Hye-rim died.”

Commenting on the North’s bizarre abductions of Japanese citizens in the 1970s and 80s, he said, “The North needed native Japanese to train agents who would work in Japan.”

Read the full story here:
Kim Jong-il ‘Gets 20% of N.Korea’s Budget for His Own Use’
Choson Ilbo
4/12/2010

Posted in Agriculture, Cabinet, CNC, Coal, Energy, Finance, Fiscal & monetary policy, Manufacturing, Military, Ministry of Railways, Railways, Real estate, Supreme Peoples Assembly, Transportation | 1 Comment »

DPRK authorities slash all prices by 99 percent

Monday, April 12th, 2010

Institute for Far Eastern Studies (IFES)
NK Brief No. 10-04-12-1
4/12/2010

As inflation and food worries continue to grow in North Korea, social unrest is palpable. According to the group ‘Good Friends’, North Korean officials slashed prices on all goods to 1/100th of their going rate in an effort to ease the public. Considering the fact that North Korea revalued its currency by the same ratio on November 30, it appears that Pyongyang is effectively acknowledging the reform’s failure.

The Good Friends newsletter reports that the Korean Workers’ Party cabinet had handed down an order to reduce the price of all goods by a factor of 100:1, while the people of North Korea were told during local meetings that currency was revalued at 100 to 1, but not in order to reduce the sale of goods by 100 to 1, as well.

It also stated that at the first cabinet meeting in March, there was discussion on the fact that it was rumored that prices had climbed several times higher than official prices, and would continue to rise. It was decided that, at first, people thought of the currency reform as a 100-fold increase in prices, and that the same was true of management in state-run organizations. Later, at the second meeting of the cabinet, it was decided that a ‘100 to 1 Price Plan’ would be distributed to each city and town.

Now, People’s Committees and security forces in each city and town are enforcing the ‘100 to 1 Price Plan’ while the central Party’s 100:1 commerce committee has distributed a class syllabus in support of the price modifications, which was lectured on throughout the country from March 16-18. This indicates that the government is again controlling all prices throughout the country.

With no goods or aid flowing in from outside, it is likely that the price and exchange rates will continue to climb. On December 9, rice sold for 23 won, but the value of the new currency falls daily, and starvation is striking people in several areas throughout the country. Anger over government policies and general feelings angst are not hard to find in families and labor groups. The government is trying to control the prices of daily necessities, but if it is unable to do so, this situation cannot avoid becoming explosive. The central government has also sent officials out to different areas of the country to enforce a rice price of 25 won/Kg. This is the highest rice sold for in markets prior to the currency reform. Enforcing the same price throughout the country is an attempt to stabilize markets, and is a temporary measure to try to keep residents’ tempers from flaring.

The November currency reform was the first currency revaluation in 17 years, and was part of a set of strong measures to restrict markets, along with market closures and bans on foreign currency. However, since last February, the inflation sparked by the currency revaluation has grown severe and internal unrest has increased, leading authorities to reopen markets and set price caps. Now, the price of rice in North Korean markets appears to have stabilized at 400 won per kilogram, but due to the unrest over the last 100 days, many middle-class residents have fallen into poverty.

Posted in Cabinet, Fiscal & monetary policy, Food, General markets (FMR: Farmers Market), Good Friends, Institute for Far Eastern Studies, Price liberalization | Comments Closed

SPA meeting last Friday

Sunday, April 11th, 2010

UPDATE 1: Here is what KCNA had to say:

SPA of DPRK Meets

Pyongyang, April 9 (KCNA) — The 2nd Session of the 12th Supreme People’s Assembly of the DPRK was held at the Mansudae Assembly Hall Friday.

It was attended by deputies to the SPA.

Officials of Party, armed forces and power organs, public organizations, ministries and national institutions and those in the fields of science, education, culture and arts, public health and media attended it as observers.

The session discussed the following agenda items: “1. On the work of the DPRK Cabinet in Juche 98 (2009) and its tasks for Juche 99 (2010)”, “2. On the results of the implementation of the DPRK state budget for Juche 98 (2009) and its state budget for Juche 99 (2010)”, “3. On the adoption of the ordinance of the DPRK Supreme People’s Assembly ‘On revising some provisions of the DPRK Socialist Constitution'” and “4. Organizational matter”.

Deputy Kim Yong Il, premier of the Cabinet, in a report on the first agenda item said that last year the indomitable mental power of all the people of the country and production potential were fully displayed and, as a result, the gross industrial output value markedly grew as compared with that in 2008. This year the Cabinet will boost the production of consumer goods and grain by leaps and bounds by putting spurs to the development of light industry and agriculture once again and reenergize the overall production by giving definite priority to the production of electricity, coal, iron and steel and railway transport and, at the same time, energetically organize and conduct the campaign for a great surge with main emphasis on stepping up the technological upgrading and modernization of the national economy, he added.

Deputy Pak Su Gil, vice-premier of the Cabinet and minister of Finance, in a report on the second agenda item said that last year’s state budget revenue was overfulfilled 1.7 percent and the state budgetary expenditure was implemented at 99.8 percent.

He noted that the plan for state budgetary revenue for this year is expected to increase 6.3 percent over last year while the plan for state budgetary expenditure is expected to grow 8.3 percent.

Speakers at the session pointed out that the Cabinet’s work last year and the implementation of its state budget were properly reviewed and summed up, this year’s tasks were clearly laid down and its state budget was correctly shaped. They expressed full support and approval of them.

They manifested their resolution to successfully put into practice the Party’s intention and idea of augmenting the country’s political and military potentials in every way and bringing about a dramatic turn in improving the people’s standard of living in this significant year marking the 65th anniversary of the founding of the Worker’s Party of Korea.

The session adopted the decision of the SPA of the DPRK “On approving the report on the work of the DPRK Cabinet and the results of the implementation of the DPRK state budget for Juche 98 (2009)” and the ordinance of the SPA of the DPRK “On the DPRK state budget for Juche 99 (2010).”

Also adopted there was the ordinance of the DPRK Supreme People’s Assembly “On revising some provisions of the DPRK Socialist Constitution”.

Deputy Pyon Yong Rip was elected secretary general of the Presidium of the SPA to fill vacancy and Deputy Jang Pyong Gyu was appointed as director of the Supreme Public Prosecutors Office at the session.

ORIGINAL POST: We still don’t know exactly what happened, but below is some information from the meeting.

According to the New York Times:

North Korea’s rubber-stamp legislature convened Friday in the capital, Pyongyang, offering few hints of a major policy shift despite a growing desperation for economic recovery.

The country’s ailing leader, Kim Jong-il, did not show up at the Supreme People’s Assembly, igniting speculation about his health and whereabouts. His absence from the assembly, although not unusual, followed some unconfirmed news reports in South Korea in the past week that he might already have embarked on a clandestine trip to China to win needed aid. South Korean officials questioned those reports, though they had earlier predicted that he might soon visit China, the North’s last remaining major ally.

Outside analysts have been closely monitoring Mr. Kim’s absences or appearances in major state affairs since his 2008 stroke fueled speculation on how long he could stay in power. Mr. Kim, 68, is now struggling with North Korea’s deepening economic woes while preparing to hand over power to a son.

On Friday, the legislative session adopted a second constitutional revision in a year, the country’s state-run news agency, KCNA, reported without providing details. The South Korean news agency Yonhap speculated that the amendment might be intended to help the transfer of power from Mr. Kim to his third son, Kim Jong-un, 27.

Others doubted it.

“I think it may have more to do with the economy or a minor readjustment of the Constitution,” said Kim Yong-hyun, a North Korea expert at Dongguk University in Seoul.

The gatherings of legislators in the North provide outside officials and analysts with a rare opportunity to seek clues to North Korean policies and any changes in its leadership hierarchy.

Kim Jong-il, who is also a legislator, has often skipped the sessions. But he used the meeting last year to demonstrate that he was still in charge despite having suffered a stroke in 2008. After months of being out of sight, he entered the parliamentary hall to the thunderous applause of loyal members, though he looked gaunt and limped slightly.

At the time, the assembly approved the first constitutional revision in 11 years to make one of Mr. Kim’s several official titles — chairman of the National Defense Commission — the supreme ruling post in North Korea. The move reconfirmed his already absolute grip on power.

Analysts had said that the session this year was most likely to focus on reviving North Korea’s moribund economy, a goal the nation had set at the start of the year.

On Friday, KCNA reported that the session passed a budget for the year that promised a 10.1 percent increase in spending for consumer goods industries and a 9.4 percent increase for agriculture.

North Korean reports on Friday’s session made no reference to the country’s tricky relations with South Korea and the United States. But the country’s Foreign Ministry reiterated that the North would continue to build and modernize nuclear weapons.

An unidentified spokesman of the ministry told KCNA that North Korea was willing to “denuclearize the Korean Peninsula” — but only if the United States abandoned its “hostile policy” toward the North.

According to AFP (via Asia One):

North Korea’s rubber-stamp parliament at its annual meeting Friday will focus on ways to improve living standards after a bungled currency change sparked widespread public anger, analysts said.

Members of the Supreme People’s Assembly (SPA) are effectively chosen by the ruling communist party, and they endorse the bills it puts forward without serious debate.

But the day-long session indicates the secretive regime’s priorities and any changes to the line-up among the ruling elite.

Yang Moo-Jin of Seoul’s University of North Korean Studies said legislators would approve institutional and personnel changes to bolster leader Kim Jong-Il’s power and prepare for the eventual succession of his third son Jong-Un.

The North is apparently moving to put the national police agency under the direct control of the National Defence Commission headed by Kim, he said.

It was unclear whether the leader would attend the meeting, as he did last year – looking frail and gaunt after a reported stroke.

Since then the regime has been grappling with serious food shortages and tougher UN sanctions imposed to curb its missile and nuclear ambitions.

The currency revaluation last November 30 wa

Posted in National Defense Commission, Political economy, Supreme Peoples Assembly | 1 Comment »

Tax? What Tax? The North Korean Taxation Farce

Monday, April 5th, 2010

Daily NK
Yoo Gwan Hee
4/5/2010

In North Korea, April 1st is commemorated as “Tax Abolition Day.” Ever since the law, “On Completely Abolishing Taxes,” was ratified through the Supreme People’s Assembly on March 21, 1974, North Korea has claimed both within and without to be the only country in the world that does not collect taxes. However, their claim is only for propaganda purposes, for North Koreans labor under a list of state-imposed taxes and duties which grows longer day by day.

Take the example of electricity. Power distribution center members in every city and town visit households in their region alongside the chairperson of the local People’s Unit, whereupon they collect electricity payments according to the number of electric bulbs and electronic equipment therein. This process is done quarterly. In the late 1990s, the quarterly electricity bill per household in Pyongyang was about 20 won. To reduce costs, of course there were people who removed electric bulbs and hid electronic equipment such as irons whenever the power distribution center had workers in their neighborhood.

Since the 2002 economic management reforms were announced on July 1, however, electricity bills have increased greatly. For families living in luxurious apartments in the Jung-district of Pyongyang with televisions, refrigerators and electric fans, households pay as much as 800 or 900 won per quarter.

After the so-called July 1 Reform Measure, troubles between the power distribution center and the people increased. The North Korean people were understandably displeased with the power distribution center, for it was trying to collect money for a utility whose availability was and remains far from regular.

Next, let’s look at reserve food and organizational expenses. North Korea has nine levels of food distribution. From 100g to 900g is supposed to be distributed per day depending on the level, but for the purpose of stocking up reserves, up to 100g is collected from the people instead. Additionally, people are forced to submit approximately two percent of their salary for organizational expenses.

Next, to support for the construction of historical sites. North Korea emphasizes the “voluntary participation” of the North Korean people under the Party apparatus and workers’ organizations. Construction of historical sites for the idolization of Kim Il Sung and Kim Jong Il is frequently organized. Also, officials often collect money from people in order to support those construction projects of which the cabinet is in charge.

Then there is free education. It is officially called “free education,” but school administration expenses are all covered by students and parents. Students have to collect waste paper, waste iron and waste rubber, or raise rabbits and submit the pelts to school. After 2000, there have even been students engaging in business around markets in order to provide supplies for submission to the school.

Onwards, then, to market stands rental fees. After the July 1 Reform Measure, the amount of tax collected at markets suddenly increased. Market stand rental fees already existed before the July 1 Reform Measure but, after 2002, market management centers started collecting market management tax as well, basing it on each product sold. Noodle sellers paid ten won per day, while soybean curd sellers paid three won.

Market stand rental fees became more systematic as well after general markets opened in late 2003. According to the product being sold and daily sales figures, market management centers charged rental fees. In present-day Nammun Market, Hoiryeong, the stand rental fee is said to have been fixed at 100 won per month.

Separate from the stand rental fee, monthly tax is charged on products for sale in the markets. For example, Nammun merchants pay additional taxes of 300 won for industrial goods, 180 won for pork, 150 for cigarettes, alcoholic drinks and fish, 120 won for food and 100 won for general merchandise.

So, while the North Korean media deliver their diet of propaganda promoting North Korea as the world’s only taxless country, be wise to the reality of the North Korean people suffering under an increasing tax burden.

Posted in Education, Electricity, Energy, Fiscal & monetary policy, Food, General markets (FMR: Farmers Market), Labor conditions/wages, Public Distribiution System (PDS) | Comments Closed

Pramod Mittal eyes stake in DPRK mines

Sunday, April 4th, 2010

According to the Economic Times of India:

Pramod Mittal, the younger sibling of steel tycoon LN Mittal and head of Global Steel Holdings, is negotiating with the North Korean government for a stake in the country’s Musan Iron Ore mines, estimated to hold reserves of more than seven billion tonnes. The move by Global Steel is aimed more at accessing the mineral resource, as the ore is in sharp demand with steelmakers expanding capacity and iron ore miners moving to a quarterly price regime to meet growing markets in Asia and Africa.

Mr Mittal, who is chairman of Global Steel, a closely-held company of the Mohan Lal Mittal family, had visited Pyongyang last week to talk to senior government officials to work out the modalities of a share of Musan’s reserves. The ML Mittal family consists of elder son LN Mittal, Pramod Mittal and younger brother Vinod Mittal, who looks after the Mumbai-based Ispat Industries. When contacted, Pramod Mittal declined to comment. “Our visit to North Korea is to further business interests. We are not looking for any stake in Musan,” he told ET .

According to people familiar with the development, Global Steel could likely be negotiating with Pyongyang for development rights to Musan for a fixed peiod, where Global Steel would do the mining and get to buy an agreed portion of the reserves. Typically, in the mining industry, such development rights are for a long term period of 20 to 50 years.

Global Steel, which is registered in the tax haven Isle of Man, has steelmaking operations in Bulgaria and Nigeria and a 20-year management contract to operate Zimbabwe Iron & Steel. Although Global Steel has a small steelmaking capacity of just more than 2 million tonnes, iron ore from Musan would not be used for Global Steel’s operations. Global Steel also owns two coal blocks in Mozambique where ArcelorMittal, controlled by elder brother LN Mittal, also has coal mines. While the Mittal family has maintained that Global Steel has no link to ArcelorMittal, the world’s largest steel company has been reportedly keen on Global Steel’s assets.

Two years ago, North Korea had granted development rights on Musan to China’s Tonghua Iron & Steel Group for a period of 50 years. However, Pyongyang recently terminated that agreement without offering any reason. People connected with the issue said Global Steel is negotiating with Musan on the amount of investment needed for developing the mines and also on building infrastructure, which is integral to any mining activity.

While the talks with Pyongyang is at an initial stage, under the previous agreement with Tonghua, the Chinese company had reportedly agreed to put in about 7 billion yuan, and had also planned to produce 10 million tonnes of iron ore each year. Of the total investment, about $240 million was for building roads and railways from Musan to Tonghua in China. The Musan iron ore mines are close to the Chinese border. The secretive North Korean government has recently been sending out feelers to global mining companies for developing its vast mineral deposits, said to contain one of the world’s largest reserves, closely rivalling Brazil.

The Musan Mine is the DPRK’s largest and satellite imagery of it can be seen here.

Here is a story about Tonghua’s Musan deal.

Read the full story here:
Pramod Mittal eyes stake in North Korea’s Musan mines
The Economic Times
MV Ramsurya
4/5/2010

Posted in China, Foreign direct investment, India, Mining/Minerals, Musan Mine, Tonghua-Dandong Economic Zone | 1 Comment »

DPRK IT update

Sunday, April 4th, 2010

According to the Korea IT Times:

The number of science and technology institutions in North Korea is estimated to hover around 300; about 200 institutions have been officially confirmed. Therefore, the North is unable to focus on building the hardware industry, which requires massive capital input and long-term investment, and is left with no choice, but to be keen on nurturing IT talent geared toward software development. As a result, the North has been producing excellent IT human resources in areas like artificial intelligence, needed for controlling man-made satellites and developing arms systems, and programming languages.

The following IT institutions are in charge of fostering the North’s software industry: DPRK Academy of Sciences, Korea Computer Center (KCC), Pyongyang Information Center (PIC) and Silver Star, which is currently under the KCC.

In particular, the creation of the PIC, modeled on the Osaka Information Center (OIC) at Osaka University of economics and law, was funded by Jochongnyeon, the pro-North Korean residents’ league in Japan, and was technologically supported by the UNDP. The Jochongnyeon-financed KCC has been responsible for program development and distribution; research on electronic data processing; and nurturing IT talent.

Thanks to such efforts, nearly 200,000 IT talents were fostered and about 10,000 IT professionals are currently working in the field. Approximately 100 universities such as Kim Il-sung University, Pyongyang University of Computer Technology and Kim Chaek University of Technology (KUT) – and 120 colleges have produced 10,000 IT human resources every year. At the moment, the number of IT companies in the North is a mere 250, while the South has suffered from a surplus of IT talent. Therefore, inter-Korean IT cooperation is of great importance to the two Koreas.

As aforementioned, the North has set its sights on promoting its software industry, which is less capital-intensive compared to the hardware industry. Above all, the North is getting closer to obtaining world-class technologies in areas such as voice, fingerprint recognition, cryptography, animation, computer-aided design (CAD) and virtual reality. However, the North’s lack of efficient software development processes and organized engineering systems remains a large obstacle to executing projects aimed at developing demand technology that the S. Korean industry wants. What is more, as the North lacks experiences in carrying out large-scale projects, doing documentation work in the process of development, and smoothing out technology transfer, much needs to be done to measure up to S. Korean companies’ expectations.

Thus, the North needs to build a system for practical on-the-job IT training that produces IT talent capable of developing demand technology- which S. Korean companies need. In addition, it is urgent for both Koreas to come up with an IT talent certification system that certifies both Koreas’ IT professionals.

Read the full story here:
North Korea Needs to Set Up Practical IT Training and Certification Systems
Korea IT Times
Choi Sung
4/2/2010

Posted in Chongryun, Communications, Computing/IT, Education, Internet, Intranet, Japan, Kim Chaek University of Technology, Korea Computer Center (KCC), Pyongyang Informatics Center (PIC), UN, UNDP | Comments Closed

Threat of confiscation is lowering prices?

Monday, March 29th, 2010

According ot the Daily NK:

The current rice price downturn in North Korea has been caused by the fact that wholesalers and individuals dumped rice and corn in bulk onto the market in order to avoid it being confiscated by the authorities, according to sources inside the country.

A source from North Hamkyung Province reported on the 26th that the rice price in Chongjin had dropped even further.

Recently, the authorities reportedly announced that food distribution would be normalized and that grain stored by individuals would be confiscated. Therefore, citizens started releasing their stored food onto the market in order to avoid confiscation, generating oversupply.

The source said on a telephone conversation with the Daily NK on the 26th, “In the Youth Park Market in Shinam-district, Chongjin, rice is now 480 won and corn 210 won per kilo.

The source said, “The Army security apparatus has been confiscating food stored by foreign currency earning organizations. It is a part of the implementation of their plan to lower food prices to state-designated levels.”

One North Korean resident told The Daily NK last week, “Prices have been fluctuating since the redenomination, but now a notice has been handed down from the Cabinet saying that prices will be stabilized by April 1. It says the Cabinet will deal with this confusion in the people’s economy.”

The source added, “In inspections by the Prosecutors Department of the Ministry of the People’s Armed Forces and Defense Security Command, foreign currency earning apparatus affiliated with military units stationed in Chongjin and another five organizations were revealed to be storing around 260 tons of grains, which was confiscated. Around 90 tons of grain stored by the No. 9 Division was also taken and managers were interrogated by the inspections group.”

With the downturn in food prices, the exchange rate in Chongjin also went down to 690 won to the dollar.

Confiscation Threat Spurs Grain Market Flood
Daily NK
Jin Hyuk Su
3/29/2010

Posted in Food, Price liberalization, Private property, Public Distribiution System (PDS) | Comments Closed

North Korean Economy Watch