Archive for the ‘Foreign direct investment’ Category

China to lease two DPRK islands (update)

Thursday, October 28th, 2010

(via One Free Korea) Global Times reports (in Korean) that the DPRK is leasing two islands (황금평 and 위화도) to China.

Here is a satellite image of the two islands (highlighted):

According to the article:

South Korea’s Hankook Ilbo daily newspaper reported Thursday that North Korea has decided to extend the lease terms of two islands to Chinese companies for the establishment of a free trade zone.

However, analysts say the zone will more likely be developed as a trade area to facilitate business with China.

Both islands are located on the Yalu River, which constitutes the northwestern boundary between North Korea and the northeast region of China.

Hankook Ilbo reported that North Korean leader Kim Jong-il agreed to establish a free trade zone of 50 square kilometers on the two islands during his visit to China in May, and foreigners won’t need a visa to visit the islands.

The extension of the lease term by 100 years – starting this past May – to Chinese companies is unusual because Pyongyang generally leases land to foreign companies for 50 years, the report said.

By press time, state-run media in North Korea hadn’t confirmed the report.

South Korea’s Yonhap News Agency reported earlier this year that in order to attract foreign investment to North Korea, Pyongyang will set up a free trade area, located near the Sino-North Korean border city of Dandong, Liaoning Province, to be developed by a Chi-nese enterprise.

The report quoted an informed source as saying the scale of investment in the two islands will total $800 million.

“I don’t think North Korea will establish a free trade zone in the border areas that soon,” said Lü Chao, director of the Korean Research Center at China’s Liaoning Academy of Social Sciences. “But it is likely that the two islands will be developed into a border trade zone that can help improve the lives of the locals and be conducive to regional stability.”

Lü told the Global Times that developing a free trade zone in North Korea’s border areas with China might take longer.

Separately, Japan’s Yomiuri Shimbun newspaper reported Monday that Kim Jong-un, the third son of Kim Jong-il, recently said his country needs food more than bullets.

“In the past, it was all right to have bullets and no food, but now we must have food, even though we don’t have bullets,” the newspaper quoted him as saying.

The paper said Kim Jong-un made the remarks during a visit to Kimchaek city in Ham-gyong Province in late September, and the comments are confirmed in documents recently disseminated to party officials.

Kim Jong-un was promoted to a four-star general and vice chairman of the ruling Workers’ Party’s Central Military Commission last month during an important meeting of the party.

The White House said Thursday that North Korea appeared to be in the early stages of a leadership transition, and it would still take some time to discern the final outcome.

“We’re watching the transition closely,” Jeff Bader, US President Barack Obama’s Asia adviser, told reporters.

The idea of building a special economic zone near Sinuiju has been proposed several times but it never seems to take hold.  Given the level of economic growth in Dandong over the last five years, and China’s growing clout in the DPRK, maybe things will be different this time.

Read the full aticle here:
NK leases islands to Beijing: report
Global Times
Wang Zhaokun
10/29/2010

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Canada to adopt DPRK sanctions

Thursday, October 28th, 2010

UPDATE (10/31/2010): According to CTV News:

The head of the Canadian Security Intelligence Service quietly told a crowd of insiders he’s worried about North Korea and Iran surreptitiously trolling Canada for components to build an atomic bomb.

In a speech to academics and former intelligence officials, CSIS director Dick Fadden spoke of the spy service’s “active investigations” of people trying to procure nuclear materials.

The threat of weapons of mass destruction is an “area where we have to worry far more than we did not too long ago,” Fadden said.

“North Korea and Iran being people that we worry about the most.”

Fadden made the unusually candid comments in a previously unreported — and still partly secret — address to a late May gathering in Ottawa of the International Association for Intelligence Education.

The CSIS director also elaborated on his concerns about foreign interference in Canadian politics, as well as the threat of cyberterrorism. In addition, Fadden mused aloud on whether simply jailing homegrown terrorists is a real solution to the problem of radicalization. And he told the audience India has more influence in Afghanistan than Canada and its major coalition partners combined.

ORIGINAL POST: According to CTV:

Canada is adopting tough new sanctions against North Korea intended to demonstrate to Pyongyang that “its aggressive actions will not be tolerated.”

Foreign Affairs Minister Lawrence Cannon announced the new restrictions Thursday.

Under the new controlled engagement policy Canada’s relations with North Korea will be restricted to just a few areas, Cannon said.

Regional security concerns, human rights and humanitarian issues, inter-Korea relations and consular issues are now the only acceptable topics of contact between the two countries, Cannon said.

“All government to government co-operation or communication on topics not covered under the controlled engagement policy have now stopped,” Cannon said.

Cannon also announced new economic sanctions that will soon be put into place.

He said all imports from and exports to North Korea will be halted, apart from certain humanitarian exceptions.

There is also a ban on investment in North Korea by Canadians or people in Canada.

The sanctions also restrict the provision of financial services and the transfer of technology to North Korea.

All North Korean ships and aircraft are also banned from either landing in Canada or passing through its airspace, Cannon said.

“Canada takes a principled stand against those who recklessly commit acts of aggression in violation of international law,” Cannon said.

“The adoption of a controlled engagement policy and the imposition of special economic measures send a clear message to the North Korean government that its aggressive actions will not be tolerated.”

Canada has taken a tough stance with North Korea following the sinking of the Cheonan, a South Korean navy ship, earlier this year.

Forty-six sailors were killed when the ship went down. A multi-national investigation concluded the warship was sunk by a North Korean torpedo.

In the wake of the attack, Ottawa announced tougher diplomatic and trade restrictions, suspended high-level visits from officials and joined in the international condemnation of the attack.

Cannon on Thursday called on Pyongyang  to “improve its behaviour in complying with its obligations under international law.”

“These sanctions are not intended to punish the North Korean people. The sanctions we are announcing today are aimed directly at the North Korean government,” he said.

The level of trade between the DPRK and Canada is minimal, so these actions are more symbolic than anything else.

Though the two countries exercise diplomatic relations, there is no DPRK embassy in Canada and vice-versa.

Read the full story here:
Ottawa drafting ‘tough’ new sanctions for North Korea
CTV
10/28/2010

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Can North Korea embrace Chinese-style reforms?

Thursday, October 28th, 2010

According to China Economic Review:

Could North Korea be saved by Chinese-style reforms? In return for its continued support, China is pushing the rogue state to liberalise its economy, and Chinese firms are making inroads into various sectors, especially infrastructure and mining. Earlier this week, I interviewed Felix Abt, a Swiss business consultant who was appointed managing director of a pharmaceutical joint venture in Pyongyang with a brief to turn around the loss-making company, about his experiences over the last eight years.

How open is North Korea to foreign investment, and how many foreign companies are operating on the ground?

In 1992 the Supreme People’s Assembly adopted three laws allowing and regulating foreign investment — the Foreign Investment Law, the Foreign Enterprise Law, and the Joint Venture Law.

Since then, foreign investors have become active in a variety of industrial and service industries. There are a few hundred foreign-invested companies operating at present, mainly smaller sized ventures ($100,000 to $3 million) and of Asian origin (with China ranking No.1).

There are a few very large foreign investments, mainly in the telecom and cement industries. Western multinationals have been shying away from North Korea for fear of ending up on a sanctions list in the world’s largest economy. BAT sold its highly profitable tobacco factory due to political pressure in Great Britain to a Singaporean company a few years ago.

What sort of person sets up business in North Korea? What sort of industries have arrived and what sectors are not represented?

The domestic market is still very small and limited and and not much growth can be expected in the foreseeable future. So to talk about a promising emerging market at present would be a silly exaggeration.

However, North Korea is a very interesting location for the processing of products from garments to shoes to bags where you send the cloth or the leather and the accessories and they send you the finished products back.

The same goes for the extraction of minerals and metals, abundantly available in North Korea, in which case you would send equipment and get the mining products.

In addition, the manufacturing of low to medium technology items is very competitive and such products are already being made with foreign investment in North Korea from artificial flowers to furniture to artificial teeth. I was involved in making the business plan for the artificial teeth joint venture and know therefore that such products can be manufactured with a much better profit margin than for example in the Philippines where the artificial teeth had been produced before.

A particularly promising industry is IT due to the extraordinary quantity and quality of mathematicians unmatched by other countries. The first and only software JV, Nosotek, has seen remarkable successes within a very short time from its foundation and could become a subject of interest to investors who would never have thought of putting any money in North Korea until now.

How easy is it to do business there? Are most foreigners concentrated in Pyongyang or are they spread around?

It depends on the expectations, on the choice of the local partner and on the expatriate staff a company sends there. You need to thorougly select the most suitable local partner and an expatriate manager that is not only professionally competent but also can adapt to and cope with a demanding business environment.

The success of the pharmaceutical joint venture I was running in the past depended on a fast capacity building of the Korean members of the board of directors, managers and staff. I brought them to China where they visited the first foreign and Chinese invested pharmaceutical JV and I convinced its Chinese octogenarian architect to become a member of our company’s board of directors.

Since he faced very similar problems decades earlier he could convince the North Koreans quite easily why certain things had to be done in a certain way to make the business successful. We visited a great number of pharmaceutical companies, wholesalers, pharmacy chains in China and some of our staff even worked in a Chinese factory for some time.

When I wanted to set up the marketing and sales function I was first told that “companies in the DPRK usually don’t have a sales dept.”. I was asked to send a letter to the cabinet to explain my reasons to get the permit for doing so. The visits in China were surely important eye openers and helped getting things organised like in any other country.

The Korean managers and staff quickly acquired all the necessary skills and were able to run the day to day business (factory, import and wholesale of pharmaceuticals, pharmacies) alone when my term ended as managing director.

Many foreign business people are based in Pyongyang, but there are also many working in different places throughout the country, e.g. near mines in the mountains.

Hu Jintao has urged North Korea to speed up its economic reform, using China as a model. Could North Korea open up in the same way over the next few years?

The Chinese are better informed than the scholar and North Korea expert who recently wrote in the Wall Street Journal that the country’s elite would never agree to reform its economy as they fear the system would then collapse.

Together with the Chinese, I believe the risk of a collapse is much bigger if no reforms are carried out than if there are slow and controlled changes.

Once the economy starts taking off and people’s living standards rise the people will hardly challenge the system and the leadership even though the North Korean people know that South Korea’s economy is much more advanced.

Read the full story here:
Can North Korea embrace Chinese-style reforms?
China Economic Review
Malcolm Moore
9/23/2010

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China and DPRK signaling greater cooperation

Thursday, October 28th, 2010

Aidan Foster-Carter wrties about the recent increase in China-DPRK “friendship” activities in the Asia Times

Over a month ago, in an article in these columns, I suggested a number of reasons why North Korea may well become a quasi-satellite of China.

Well, it’s happening even faster than I expected. In all the excitement about Kim Jong-eun’s coming-out for a second time, at the 65th birthday of the ruling Workers’ Party of Korea (WPK) on October 10, we risk missing another key aspect of that big Pyongyang parade.

The “reptile press” – one of my favorite North Korean phrases; yup, I’m a lizard and proud – all oohed and aahed at their first glimpse of the “young general”. Most paid less attention to a middle-aged chap also standing on the podium, not far from the clearly ailing Kim Jong-il. The one without a badge – meaning he isn’t North Korean. A rare privilege for a foreigner.

How now, Zhou
Meet Zhou Yongkang. Hardly a household name, yet ranked ninth in China’s politburo. A former minister of public security (2002-2007), he still has responsibilities in that key area.

Now Zhou has a new role too: he is China’s point man on North Korea. This seems to have been his first trip there, but it won’t be his last. Barely a week later, back in Beijing, he was on the job again, this time hosting a large visiting North Korean delegation (of which more below).

Zhou has been parachuted in above Wang Jiarui, the head of the Chinese Communist Party’s international liaison department, who in recent years had been China’s most frequent flyer to Pyongyang. Wang is still on the case: he was part of the October 10 delegation too, but clearly ranked below Zhou.

This seems less a demotion for Wang than a broadening of Beijing’s agenda. Wang’s main task, a thankless one, was and is to try to chivvy the Kims into line on the nuclear issue. That remains a key goal, but now in a wider context. China wants to deepen its overall relations with North Korea. To that end, bringing in a new more senior figure to take charge flatters the Kims, while Zhou’s background in public security is doubtless meant to reassure them.

China means business
Who else did Zhou bring along? Not the usual cross-section of the great and the good, but the neighbors: meaning senior figures from the three Chinese provinces – Jilin, Liaoning and Heilongjiang – which border or are close to North Korea. This trio had a special dinner with a quartet who are their North Korean equivalents: the party secretaries – provincial governors in all but name – from North Pyongan, Jagang, Ryanggang and North Hamgyong, the four provinces which adjoin China across the Yalu (Amnok in Korean) and Tumen rivers.

Not only dinner, but a deal. On the eve of Pyongyang’s parade, the two sides signed a trade agreement. No details were given, but again each side’s border bigwigs were in evidence.

Nor did it end there. A week later, one of North Korea’s rising stars led a big delegation to China, with provinces again prominent. Aged only 53, much younger than most of North Korea’s gerontocratic elite, Mun Kyong-dok is a new alternate politburo member. He also holds the key job of party secretary for Pyongyang. As such, on September 30 he gave a keynote speech in front of 150,000 people, congratulating Kim Jong-il on his re-election as leader.

October 16 saw Mun on the road, shepherding all 11 of North Korea’s provincial or big city party secretaries to – where else? – Beijing. Welcoming them, Zhou Yongkang – who else? – noted that this was “the first time that the secretaries from all the WPK provincial and municipal committees have visited China”, adding, “I wish that you will expand exchange with various Chinese regions you’re visiting and achieve success from your tours.” Mun replied that “We will study and learn the successful experiences from China.”

Maybe this time?
We’ve heard that before, even from Kim Jong-il – who forgets all about it as soon as he gets back home. But as Sally Bowles sings in Cabaret: “Maybe this time.” Sending such a large team – a full house, indeed – on the road in this way, including several younger and newly appointed provincial party bosses, looks like a real effort to take things forward. China won’t be impressed if its mendicant neighbor merely rattles the begging bowl again.

Mun’s team went on to – where else? – the northeast, visiting factories in Heilongjiang and Jilin. These provinces have in the past had bones to pick with their unneighborly neighbor, which too often fails to pay for coal or other goods – and sometimes doesn’t even return the railway wagons used to deliver them. That sort of tiresome trickery will have to stop. Time will tell whether North Korea has really turned over a new leaf in its business dealings.

Blood brothers
On another front, by a convenient coincidence October 19 was the 60th anniversary of China’s entry into the Korean War. The massed ranks of Chinese People’s Volunteers (CPV) – old British army joke: “I want three volunteers: You, you and you!” – turned the tide, saved Kim Il-sung’s bacon and stopped General Douglas MacArthur wiping the Democratic People’s Republic of Korea (DPRK) off the map.

Cue yet more love-ins. The state-run Korean Central News Agency (KCNA) ran a stirring headline: “Friendship Forged in Blood in Anti-US War.” Special events included a photo exhibition, a Chinese film week and performances by a visiting art troupe from the People’s Liberation Army (PLA). A delegation from the Korean People’s Army visited China, led by vice minister of the People’s Armed Forces Pyon Il-son: a hitherto obscure general, but evidently another name to watch.

China reciprocated by sending a better-known bigwig. (Speaking of which, he wears one – or so says Wigipedia.) Unlike Zhou Yongkang, who is new to this patch, General Guo Boxiong – vice chairman of China’s Central Military Commission – has had North Korean links for at least a decade; he visited in 2001 with then-president Jiang Zemin.

Usually the CPV anniversary is marked by a low-key wreath-laying and a few press articles. But 60 is a big one, and this time Pyongyang pulled out all the stops. There was a mass rally – “held with splendor”, gushed KCNA – with Kim Jong-il and Kim Jong-eun in attendance and much stirring rhetoric. The dear leader also hosted a dinner, again with his son present.

Even Arirang has got in on the act. North Korea’s striking yet introverted mass games have finally admitted (pace juche) that the Kims didn’t go it alone; they got by with a little help from their friends. KCNA on October 22 described a newly added scene, “Friendship Arirang”. This highlights the role of the CPV, portrayed with “drums of different sizes, ribbons, red flags and other hand props … several-dozen-meter-long dragons, pandas and lions.”

We helped you first
One wonders what Chinese visitors who are the mainstay of North Korea’s thin tourist trade make of such cliches – or the fact that, the way Pyongyang tells it, that is only half the story. For Arirang also, and first, depicts “the Korean People’s Revolutionary Army and Chinese armed units fighting together against the Japanese imperialists”. The implication is that this was somehow reciprocal: Korea helped China out, and then China repaid the compliment. Note also the disrespect: Korea had an army, China merely “armed units”. What, no PLA?

Pull the other one, comrades. True, a small but gallant band of Korean communists under Mu Chong, a veteran of the Long March, were with Mao Zedong in Yanan. Separately, the young Kim Il-sung was one of a few guerillas – under Chinese command – who skirmished with the Japanese in Manchuria before being chased across the border into the Soviet Union. Kim came back in Soviet uniform and set about purging rivals – including Mu Chong, who had to flee to China. All quite a can of worms, which it seems unwise of North Korea to risk opening.

CPV casualty figures tell their own story. This year Beijing quantified these. A staggering three million Chinese troops fought in what China still calls the “War to Resist US Aggression and Aid Korea”. Over 180,000 never came back. PLA statistics show 114,084 killed in action or accidents, with another 25,621 missing. A further 70,000 died from wounds, illness or other causes. There are 183,108 registered war martyrs. Others put China’s losses as even higher. With all respect to Mu Chong, a few Koreans’ sacrifices for China don’t begin to compare.

Nuclear hopes and fears
China’s many and mixed motives vis-a-vis North Korea now include never to get dragged into war like that again. To that end, Beijing still professes faith in the six-party talks on North Korea’s nuclear program which it hosts, even though these achieved little tangible – despite many hopes, and much talking-up – over five long years. (They began in 2003 and have been stalled since 2008.)

Here too there is fresh activity. Hardly had the cheers echoing in Kim Il-sung Square died away than the North’s long-time nuclear negotiator Kim Kye-gwan, newly promoted to first vice minister, led a delegation to Beijing on October 12. There followed four days of what KCNA called “an exhaustive and candid discussion on DPRK-China relations, resumption of the six-party talks and the regional situation, etc.” It added: “The DPRK is ready for the resumption of the above-said talks but decided not to go hasty [sic] but to make ceaseless patient efforts now that the US and some other participating countries are not ready…”

True. South Korea and Japan, like the United States, see no point in dusting off the six-party circus without clear signals from Pyongyang on two fronts: a serious will to give up nuclear weapons, as against playing games; and an admission that it sank the South Korean corvette Cheonan in March.

That is a hard gap for Beijing to bridge – especially if there is any basis to recent rumors that North Korea, so far from disarming, may be planning a third nuclear test. Somehow I doubt this. China’s fresh embrace of its tiresome neighbor is not unconditional. I would expect its price for propping up the Kims to be twofold: Market reforms – and no more nuclear tests.

Another bang would sorely tax China’s patience with this tiresome thorn in its northeastern flesh. Beijing is still sheltering number one son Kim Jong-nam, who on October 12 rained (or an earthier verb springs to mind) on little brother’s parade by declaring that he personally was against a third-generation succession. Might anyone try to change his mind? Jong-nam may look ghastly, but he is pro-reform. If Jong-eun proves a pest or a dud, China has alternatives.

Read the full story here:
North Korea: Embracing the dragon
Asia Times
Aidan Foster-Carter
10/28/2010

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KWP reps visit Chinese counterparts

Thursday, October 21st, 2010

According to the Choson Ilbo:

The senior secretaries of all North Korea’s 11 metropolitan and provincial party committees paid a rare collective visit to a senior member of the Communist Party of China in Beijing on Tuesday.

The North Korean delegation led by Mun Kyong-dok, the senior secretary of the Pyongyang municipal party committee, met with Zhou Yongkang, a member of the Politburo Standing Committee who ranks ninth in the hierarchy, to discuss economic cooperation.

Zhou was quoted by the official Xinhua news agency as saying it was “the first time” in the history of bilateral relations that senior secretaries of the Workers Party’s metropolitan and provincial committees have visited China as a group. “I wish that you will expand exchange with various Chinese regions you’re visiting and achieve success from your tours.”

The North Koreans also met with their Chinese counterparts to discuss investment in development projects in the North. The Chinese officials were in Beijing to attend the fifth plenary session of the 17th Communist Party Central Committee.

A South Korean government official said, “The North Korean officials’ visit to Beijing is equivalent to all 16 South Korean metropolitan mayors and provincial governors flying to Washington as a group to discuss exchange and cooperation with ruling-party lawmakers and state governors in the U.S.” He said since Kim Jong-il’s son Jong-un was established as the official successor to the leadership, the North and China have increased the frequency of personnel exchanges “to discuss more substantive matters than before.”

The profiles of the Chinese delegation that attended the 65th anniversary celebrations of the North Korean Workers Party were also exceptional. It included senior officials of the three Chinese northeastern provinces — Sun Zhengcai, the secretary of the Jilin provincial party committee, Chen Xi, the deputy secretary of the Liaoning provincial party committee, and Du Yuxin, the deputy secretary of the Heilongjiang provincial party committee.

They were welcomed at Sunan Airport by Ju Yong-sik, the senior secretary of the party committee in Jagang Province, a border region. The senior secretaries of the party committees in all four North Korean provinces bordering China — Ju from Jagang Province, Ri Man-gon from North Pyongan Province, O Su-yong from North Hamgyong Province and Kim Hi-taek from Yanggang Province — attended a dinner that evening in honor of the Chinese delegation.

“There have recently been more signs of the North and China deepening and developing economic cooperation, including various development projects focusing on the border areas,” a Unification Ministry official said. “It seems that after the North’s Workers Party and the Chinese Communist Party finished talks at headquarters level, their provincial party committees have now begun concrete cooperation.”

Military exchanges are also increasing ahead of the 60th anniversary of the day the Chinese joined the Korean War on Oct. 25.

The official North Korean Central Broadcasting Station on Tuesday reported a delegation of Chinese People’s Volunteer Veterans led by Wang Hai, a former Air Force commander, and the People’s Liberation Army’s art troupe arrived in Pyongyang for the anniversary.

O Kuk-ryol, vice chairman of the National Defense Commission, and Pak Jae-kyong, vice minister of People’s Armed Forces, hosted a reception for them.

On Oct. 14, a North Korean Army delegation led by Pyon In-son, another vice minister of People’s Armed Forces, visited China, to tour PLA units. Quoting the North’s official Rodong Sinmun daily, Xinhua said, “Friendship bonded by blood in the previous generations is being handed down to the next generation.”

A South Korean security official said, “The North is apparently trying to counter the South Korea-U.S. military alliance, which has been strengthened since the sinking of the Navy corvette Cheonan in March, by intensifying military ties with China, as well as attempting to escape international economic isolation by leaning on China.”

Mike has more at NK Leadership Watch.

Read the full story here:
N.Korea, China Grow Ever Closer
Choson Ilbo
10/21/2010

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Future Sinuiju development affecting Dandong today

Tuesday, October 19th, 2010

According to the Daily NK:

In Dandong, the number of people studying the Chosun language (Korean) is increasing, while real estate prices are rising on the back of rumors that Shinuiju, just across the North Korean border, will soon be opened up to trade and investment.

One anonymous Korean-Chinese trader who already engages in business with North Korea in the area told The Daily NK on the 15th, “The rumor among Chinese traders who have recently been in North Korea has it that ‘The North Korea authorities will open Shinuiju sooner or later.’”

As a result, he said, “There is currently an upsurge in the price of apartments and shops in Dandong, while the number of people wanting to learn the Chosun language is increasing.”

The trader explained that for the last three or four years the real estate market in Dandong has been flat. However, with reports of Kim Jong Eun’s internal appointment as the successor spreading earlier this year, the price of Hanquosheng, Dongfang Minzhu, Taiyang Dasha and other luxury apartments has increased by more than ten percent over the course of the summer.

The source pointed in particular to the fact that the price of apartments under construction in the Langtou Port area has gone from 2,000 Yuan/m² (approximately $300) in May to 3,200 Yuan/m² (approximately $480) in October. The neighborhood has particularly bright prospects as it is the location for the planned Second Yalu River Bridge under an agreement made during the visit to Pyongyang of Chinese Premier Wen Jiabao in 2009.

The Daily NK’s Korean-Chinese source explained that those primarily responsible for fuelling the real estate gains are Korean-Chinese from the Northeastern provinces of China.

He reported, “Since Dandong has geographical advantages, being cool in summer and warm in winter, as well as being able to provide for North Korea’s development of Shinuiju, the city has emerged as the best investment location for Korean-Chinese people.”

“The expectation that Kim Jong Eun is still young and has experience of life in Switzerland; therefore he knows well the need to develop the country and will have no choice but to make that decision, is driving the investment by Korean-Chinese,” the source added.

Naturally, the presumption that Shinuiju will soon offer some new opportunities for business is producing a new trend for learning the North Korean language.

Wang, a 21 year-old student from a university in Dandong said, “Chinese students know that South Korean is different from Chosun,” and went on, “Until now, South Korean has been all the rage thanks to Hallyu (as the South Korean cultural influence in wider Asia is known), but recently the number of students wanting to learn Chosun has been drastically increasing.”

There are presumed to be roughly 3,000-4,000 North Koreans residing in Dandong, including students. Some of them exchange languages with Chinese students, while some others give private classes for between five and ten Yuan an hour.

Alongside which, private Korean language institutes in Dandong are enjoying increased demand.

One South Korean who manages a Korean language institute in Dandong told The Daily NK, “In the case of Korean language institutes in downtown Dandong, each class has seen an increase of four or five students for this fall semester. Alongside Hallyu, the expectation that Shinuiju will open up has meant that the number of Chinese young people wanting to learn Korean is steadily increasing.”

Read the full story here:
Shinuiju Development Making Waves in Dandong
Daily NK
Park In Ho
10/18/2010

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[ROK] Investors in DPRK take huge hits; interest in FDI plummets

Monday, October 18th, 2010

Institute for Far Eastern Studies (IFES)
NK Brief No. 10-10-18-1
10/18/2010

The majority of joint ventures investing in North Korea have suffered significant losses since the South Korean government began to enforce sanctions as a result of the sinking of the ROKS Cheonan. On average, companies have incurred losses of almost one billion won, and most companies are no longer interested in investing in the North.

According to the Korea Chamber of Commerce and Industry, a survey of 500 companies (200 inter-Korean economic cooperative schemes and 300 other companies involved in business with the North) showed that 93.9 percent of respondents said they had suffered losses due to trade restrictions put in place due to the Cheonan incident, while 66.5 percent responded that they faced “financial difficulty” due to the sanctions. The companies have suffered an average of 974 million won in losses.

Investment and operational losses due to the ‘all stop’ order from the government amounted to 51.9 percent of losses reported, while 26 percent of respondents pointed to a reduction in orders and 22.1 percent blamed an increase in transportation and other associated costs. One company importing anthracite from the North turned to China, Vietnam, Russia, and other vendors after inter-Korean trade was restricted, but due to each country’s efforts to secure its own natural resources, this year’s sales are expected to be more than 10 billion won less than that seen last year.

Another company, investing in textiles, was strategically producing hand-made works in a North Korean factory, but now production has come to a halt and it may not be able to deliver goods it has produced. A source from the factory stated, “Personnel and raw material expenses in China, Vietnam, and other countries mean that profit margins will be minimal, and there is no alternative.” The same source also stated, “Special funds were distributed from the government, but [companies] are concerned about how long they can hold out.”

As companies invested in North Korea suffer losses in the wake of the Cheonan incident, interest in North Korea investment opportunities is also waning. 82.7 percent of responding companies believe that “even if economic cooperation was normalized, there would be no new investments or continuation of existing projects,” and 76.9 percent of respondents believed that “because of the uncertainty of the North Korean system” non-economic issues would dampen investment enthusiasm. 13.7 percent stated that difficulties with transportation and other infrastructure issues would discourage investment, and 9.4 percent of respondents answered, “North Korean authorities’…interference and restrictions” would turn away foreign investors.

Among those businesses not involved in cooperative economic ventures, 41.5 percent pointed to “North Korea’s overall reform and opening,” while 22.2 percent chose “guaranteeing the security of investments and expanding domestic SOC” as being necessary to propel investment in North Korea. Another 19.7 percent answered, “security issues like North Korean denuclearization” were necessary for improvement in the investment environment.

Many also voiced concerns over the ongoing ban on inter-Korean exchanges. When asked about the impact on business if sanctions against the North were to continue, 5.18 percent of respondents stated, “opportunities for foreign investors will suffer,” while 25.6 percent responded that the North’s economic reliance on China would grow, and 22.6 percent feared that the national image would suffer due to an increase in the security risk.

63.6 percent of respondents call for strengthened protection for investors, including protection against losses as well as guarantees on operational freedoms. 20.1 percent called for easing restrictions on businesses in the Kaesong Industrial Complex, and 16.3 percent pointed to the need for more monetary support.

Even after the government’s announcement halting inter-Korean exchanges on May 24, , inter-Korean trade worth approximately 80 million USD (90 billion won) was recorded due to a number of goods with special exceptions. 639 different cases of imported goods manufactured from raw materials or parts sent to the North prior to the May 24 restrictions amounted to 31.15 million USD, while 269 cases of pre-ordered exports amounted to just over 49 million USD.

This survey was conducted from August 12 to September 1, calling or faxing 200 companies invested in inter-Korean cooperative schemes and 300 of the 1000 companies involved in sales.

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Pyongyang trade fair begins today

Monday, October 18th, 2010

The Pyongyang International Trade fair is held twice a year: once in the spring and once in the fall.  The Fall 2010 fair begins today.  It is always held at the Three Revolutions Museum in Northern Pyongyang (satellite image here).

According to KCNA:

International Trade Fair to Be Held in Pyongyang 
 
Pyongyang, October 12 (KCNA) — The 6th Pyongyang Autumn International Trade Fair will be held at the Three-revolution Exhibition from October 18 to 21.

The fair will draw some 140 companies of the Democratic People’s Republic of Korea and other countries, exhibiting more than 57,000 pieces of 2,300 kinds with electrical machinery, steel goods, electronics products, foodstuffs, daily necessities, medicines, building materials, chemical goods and rolling stocks included.

Commercial consultation and activities for exchange and economic cooperation will also be held during the fair.

According to Ryu Jong On, a section chief of the Korean International Exhibition Corporation, businesses of China, Russia, Malaysia, Mongolia, Syria, Germany, Brazil and other ten countries have already entered their names for the fair.

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Koryolink mobile phone update

Thursday, September 30th, 2010

…from the Korea IT Times:

Back in 2008, North Korean mobile operator Koryolink entered the mobile communications business to serve 126,000 subscribers, but demand far exceeded the company’s expectations. Therefore, Koryolink plans to secure enough mobile phone circuits so as to serve all the people who wish to use mobile communications services.

In addition, the Choson Sinbo, a newspaper based in Japan, reported that the number of North Korean mobile subscribers would break the 600,000 mark by the end of this year. That means just one year and four months after 3G mobile carrier Koryolink started its business in December of 2008, the number of mobile subscribers topped 120,000 as of April of this year. The mobile communications bureau of the Chosen Post said, “In 2009, base stations were put up throughout Pyongyang and communications networks have been complemented. And major highways leading to Pyongyang (e.g. Pyongyang-Hyangsan, Pyongyang-Nampo highways), major railways sections, and each province have been equipped with communications networks.

“In the future, more than half of the counties and towns will have networks with the rest scheduled to be equipped within this year” said the Chosen Post. North Korea is planning to expand mobile connectivity to the entire nation by 2012. Those who wish to use 3G services can go to mobile service centers called “Bongsaso”, pick up an application form and submit it with a payment (the price of the mobile phone plus a 50 euro subscription fee). The prices of terminals range from 110 euro to 240 euro and some mobile devices have built-in cameras. The basic mobile device is supplied by China’s Huawei Technologies.

In the future, the 3G mobile communications service will go beyond simple voice calls: Multimedia services such as TV phones and high-volume, high-speed communications will be made possible. The subscription fees, call charges and the prices of mobile phones will go down. On the hardware front, North Korea aims to develop and manufacture its own hand-held mobile phones, but at the moment, mobile phones will be imported from foreign nations, primarily from China. For now, a new production line is planned to be built by a joint venture company, which was formed by foreign capital and the Chosen Post, to assemble imported parts into finished goods.

North Korea said it would set up a nation-wide mobile communications system in order to modernize its communication system. Building an upgraded mobile communication system has been of great interest to North Korean leader Kim Jong-il, so this project is expected to gain momentum quickly. According to South Korean mobile carriers and South Korea’s Korea Communications Commission (KCC), only senior government figures are using mobile phones right now in the North. Yet the general public will soon get their hands on mobile devices.

As for the North Korean mobile communications industry, getting foreign investors can be a problem. But the real issue lies with North Korea’s poor electricity grids, which are so insufficient that anticipated high electricity demand from maintaining network facilities and charging mobile phones may not be met. Regardless, it is indeed very encouraging that the North offers 3G mobile communication services to the public. I believe that the commercialization of 3G mobile communication services would serve as a stepping stone to North Korea’s gradual reform and market opening, which are deemed to be inevitable in the end.

Read the full story below:
North Korea’s Mobile Communications Service
Korea IT Times
Choi Sung
9/30/2010

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Paul White published September 2010 DPRK Business Monthly

Monday, September 27th, 2010

You can download the PDF here.

Topics discussed include:
Kim Jong Il Praises China’s Economic Advance
“NK Keen on Investment in Mining”
DPRK Pavilion Day Marked at Shanghai Expo
NGO Initiatives in DPRK: Triangle Génération Humanitaire (France)
Choson Exchangers Train NK in Finance, Economics, Law
ROK Civic Bodies Seek to Help NK Flood Victims
Seoul’s NK Trade Ban Hits ROK Firms Hard
Can North Korea embrace Chinese-style reforms?
Pyongyang Night Life Buzzing
Hamhung Makes Economic Strides
Pomhyanggi Cosmetics Enjoy Popularity
P’yang Hosts International Film Festival
New Numerical-control Machine Tool
Climate Map to Aid Agriculture
New Rice Strain Suitable for Double Cropping
Online Medical Service Working Well
NK’s New Money-Making Venture: Video Games
Day-care Center Opens for Kaesong Complex Children
Seoul to Allow More of its Citizens to Work at Kaesong

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