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Law on Foreign-invested Bank

Monday, February 11th, 2008

From Naenara:

The Law of the DPRK on Foreign-invested Bank was adopted by Decision No. 42 of the Standing Committee of the Supreme People’s Assembly on November 24, 1993 and amended by Decree No. 484 of the Presidium of the SPA on February 26, 1999. It was amended by Decree No. 3400 of the Presidium of the SPA on November 7, 2002.

The law consists of 32 articles in 5 chapters.

Chapter 1. Fundamentals (Articles 1-7)

This chapter stipulates that the law shall contribute to the expansion and development of cooperation with different countries the world over in the area of finance.

A foreign investor may establish and operate a foreign-invested bank within the territory of the DPRK.

Foreign-invested banks include joint venture banks, wholly foreign-owned banks and branches of foreign banks.

The state shall protect the legal rights and interests of foreign-invested banks established in the territory of the DPRK.

Chapter 2. Establishment and Dissolution of Foreign-invested Banks (Articles 8-17)

This chapter stipulates that an investor who intends to establish a foreign-invested bank in the territory of the DPRK shall file an application to the DPRK Central Bank, declaring the name of the bank, the name and curriculum vitae of its president, the registered capital, paid-up capital, operation fund, investment rate, details of business, etc.

The Central Bank of the DPRK shall decide upon the approval or rejection of the application within 50 days from its receipt.

A foreign-invested bank shall be dissolved when it cannot continue its operation due to such reasons as the expiry of the term approved, merger of the banks, insolvency, defaulting of the contract and natural calamities.

Chapter 3. Capital and Reserve Funds of Foreign-invested Banks (Articles 18 – 22)

This chapter stipulates that a foreign-invested bank shall deposit the primary paid-up capital and operating capital with a bank designated by the Central Bank of the DPRK within 30 days from the date when it obtained the approval of establishment and shall have it confirmed by a certified public accountant.

A joint venture bank and a wholly foreign-owned bank shall set aside as reserve fund 5 per cent of its annual profits each year until the reserve fund grows to 25 per cent of the registered capital and a foreign-invested bank may reserve such funds in need as bonus fund, welfare fund and R&D fund.

Chapter 4. Transactions and Settlement of Foreign-invested Banks (Articles 23 – 28)

This chapter stipulates that a foreign-invested bank may engage in part or whole of the following transactions:

A·  Accepting deposits of foreign currencies of foreign-invested enterprises, foreign enterprises and
         foreigners,

B· Granting loans in foreign currencies, overdrafting on the current account excess payment and
         discounting of foreign currency bills,

C· Dealing in foreign exchange,

D· Investment in foreign currencies,

E ·Guarantee against liabilities in foreign currencies and defaulting of contract obligations,

F· Remittance of foreign currencies,

G· Transactions of securities in foreign currencies,

H· Trust banking,

I· Credit survey and consultation.

A foreign-invested bank shall open an account with the branch of the Central Bank of the DPRK in the area where it is located and deposit the reserve fund for deposit payment.

A foreign-invested bank shall submit to the foreign exchange control organ the annual balance sheet and profit and loss account confirmed by a certified public accountant within 30 days from the date of the completion of the annual business settlement, and the quarterly financial statement and necessary statistics by the 15th day of the first month of the ensuing quarter of the year.

Chapter 5. Penalties and Settlement of Disputes (Articles 29 – 32)

This chapter stipulates that a foreign-invested bank shall be liable to fining in the following cases:

J · In case it has changed its president or vice-president or the location of the bank without approval,

K· In case it has failed to set aside the reserve fund of required amount,

L· In case it has obstructed or caused difficulties in inspection, and

M· In case it has failed to submit regular reports within a fixed period of time, or submitted false ones.

In case a foreign-invested bank engages in other transactions than those approved, or revises the memorandum, or increases or decreases the registered capital and operating capital without approval, it may be ordered out of operation.

In case an applicant for establishment of a bank fails to commence banking business within 10 months from the date of the approval, the approval granted for establishment of the bank may be withdrawn.

The Law of the DPRK on Foreign-invested Bank shall ensure stability of activities of foreign-investors and contribute to the expansion and development of the external economic relations by establishing system and order for foreign-invested banks.

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Posted in Banking, Economic reform, Finance, Foreign direct investment, Law of the DPRK on Foreign-invested Bank | Comments Closed

Forced Expulsion of Six Households in Hyesan, with Charge of “Family Defection”

Friday, February 8th, 2008

Daily NK
Jung Kwon Ho
2/8/2008

On the 23rd of last month, six households were expelled from Haesan City in Yangang Province for the reason of “their families having fled to South Korea” and 25 households were simultaneously expelled under the charges of illicit trade along the North Korea-Chinese border, a North Korean inside source relayed on the 5th.

The source said, “6 of the 152 who were arrested at the inspection which was carried out from August to October of last year by the ‘5 divisions combined Anti-Socialist Inspection Group’ received a long-term prison labor camp sentence for the reason of ‘having secret communication with family members who defected to South Korea. When their sentence was confirmed, the expulsion of the rest of the family members ensued.”

The “5 divisions combined Anti-Socialist Inspection Group” carries out the duty of regulating the inspection of anti-socialist elements by temporarily transferring people and organizing groups from five organizations, such as the Party, the Central Procurator’s Office, the Central Court, the National Security Agency, and the People’s Safety Agency.

During this inspection, 152 people who possessed cell phones and are related to crossing the border were rounded-up, 50 received a long-term prison labor camp sentence, and 100 received a labor training corps sentence. Also, 25 households with charges of illegal trade along the North Korean-Chinese border and owned foreign films were expelled, which made a total of 31 households who were forcibly expelled.

According to the source, the North Korean authorities who were surprised by the inspection results of the Anti-Socialist Group formed the second group on December 19th and unfolded a concentrated investigation of cell phone possessions and connections to families who defected to China and South Korea in Hyesan, after having considered the gravity of illicit acts of civilians in the Yangkang Province border region.

The 31 households who were expelled were those who were detained in the first inspections which began in August, 2007 and another mobilized expulsion took place in the dead of the night under the order of the second-round Anti-Socialist Group.

The source relayed, “Those who were detained in the first-round of inspections mostly owned cell phones and were people who smuggled with Korean-Chinese people in China. The 2nd Anti-Socialist Group newly cast suspicion on receiving money from South Korean National Intelligence Service and handing over North Korean internal information.”

The Party committee of Hyesan, with the expulsion approaching, mobilized a general meeting per each people’s unit and gave the following order to civilians, “The people who are expelled are all relatives of the traitors who betrayed the country and are traitors who have sold our national secret. We must not help or sympathize with those who have participated in treasonous acts.”

Those who were purged were driven to a farmland far away from the border region without any means of basic survival and were forcibly moved to abandoned homes of those who had starved to death during the “March of Tribulation” or had become beggars.

The Party committees of the farming village held a meeting of farmers before the arrival of the expelled families and gave the order of “Those who are expelled are family members of those who committed ‘treasonous acts,’ so we must not help them.”

The source added, “The 31 households who were expelled were a part of the first round of purges and after February 16th (Kim Jong Il’s birthday), the number of households who will be expelled will increase. The cadres and Chinese emigrants who were detained in the first round of inspections were excluded from this expulsion.”

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Posted in Black markets, Cell phones, Communications, Economic reform, Emigration, Political economy | Comments Closed

North Korean run restaurants diversify product lines

Thursday, February 7th, 2008

Writing today for the Asia Times, Sunny Lee gives an update on the North Korean-run restaurants in China and South East Asia.  Much has already been published on these restaurants: how they channel money back to North Korea and how the waitresses tend to defect.  (As mentioned in the Kaesong post yesterday, they probably also pay hefty bribes for their overseas posts and have well-connected relatives.)

Sunny Lee points out that these restaurants (see YouTube video here) are now diversifying their product lines to boost profits, and like other successful capitalists across Asia, they are doing it by leveraging their most unique asset–attractive North Korean women.  How?  By transforming into karaoke bars after dinner hours.

North Korea has some 100 restaurants overseas, mostly in China and Southeast Asia, including Laos, Vietnam and Cambodia. These restaurants serve as an important revenue pipeline for earning foreign currencies for Pyongyang. Each overseas North Korean restaurant is said to be allotted a revenue quota to fill, ranging from US$100,000 to $300,000 a year to send to Pyongyang, which makes the total revenue estimation some tens of millions of dollars.

The business formula – restaurant by day and karaoke bar by night – is also seen as an effort for these restaurants to meet the assigned financial quota. Currently, there are scores of North Korean restaurants in China, including in cities such as Beijing, Tianjin, Tsingdao, Dandong and Yanji. Beijing has 11 North Korean restaurants. All of these employ North Koreans whose total employment number in China is estimated to be several hundred. (Asia Times)

Despite the higher cost, business is brisk…

The reason that North Korean restaurants are expensive yet remain popular among customers is their immaculate service from beautiful employees. In China, where service quality at restaurants is often unsatisfactory, North Korean restaurants are becoming a favorite alternative among members of the businesses community. (Asia Times)

However, if you want to enjoy an authentic North Korean dining experience but have moral qualms about supporting the regime, then you can patronize similar resturants managed by North Korean defectors in South Korea–though the experience is quite different.  Whereas the Chinese pay extra for premium restaurant service in Beijing, the South Koreans pay for the genuine socialist restaurant experience.  In other words, they pay to be treated like an annoyance to the staff.

[At the Pyongyang Moran Bar (located in South Korea), the] North Korean waitresses wore traditional dresses in the bright colors that were fashionable in the South some years back. The singer’s interpretation of “Whistle,” a North Korean standard of the 1980’s, was shaky and off-key. Service was bad and included at least one mild threat. Drinks were spilled, beer bottles left unopened and unpoured.

But the South Korean customers could not get enough of the Pyongyang Moran Bar. (New York Times)

So you have your choice of North Korean themed restaurants:  The propaganda ideal or the  socialist reality.

The full articles can be found here:
Chillin’ at a North Korean karaoke bar
Asia Times
Sunny Lee
2/8/2008

In Deep South, North Koreans Find a Hot Market
New York Times
Norimitsu Onishi
5/25/2006

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Posted in China, Economic reform, Education, Finance, Fiscal & monetary policy, Foreign direct investment, Joint Ventures, Restaurants, South Korea | Comments Closed

Tourism boost to North in works – and this is good

Wednesday, February 6th, 2008

Yesterday the Jong Ang Daily reported that Hyundai Asan hopes to draw more tourists to the DPRK this fall, but their forecasting record is not exactly stellar:

The number of tourists to Mount Kumgang tallied 350,000 last year. The North Korean tour unit of Hyundai Asan hopes to pull the number of visitors up to 430,000 this year, 10,000 of whom would head to Kaesong, which began tours in December, and 15,000 of whom would visit Mount Paektu, with tours slated to start in May.

Hyundai Asan had marked annual losses from 1999 until it made profits in 2005. Its 2007 profits totaled 10 billion won.

Today, Andrei Lankov, writing in the Asia Times, chimes in on his experiences with the new Kaesong Tour and gives a rationale for western participation in such activities:

The Kaesong tour is the first project which gives the average South Korean, Mr Kim or Ms Pak, an opportunity to see a semblance of North Korean life. Hitherto, only a handful of South Koreans, most of them government officials, have been able to visit North Korean cities. Now, for the first time in 60-odd years, a very limited opportunity is open for an anybody who is willing to pay a fee.

Of course, North Korean authorities went to extraordinary lengths to prevent any interaction between locals and visitors. The list of prohibited items is quite impressive. Tourists cannot take any kind of printed material, computers and computer equipment, mobile phones, radios and video cameras, universal serial bus and other memory devices. The old film cameras are banned as well. Only digital cameras are allowed into the North, since at the border check point North Korean police officials check every single picture taken by every single tourist.

Despit the limitations, Lankov still feels that these types of exchanges are ultimately worthwhile…

The extraordinary security measures undertaken by the North Korean authorities ensure that only a very limited number of northerners are allowed to approach the visitors. Nonetheless, the tours are a major event.

Every single day, a small city is invaded by an impressive motorcade: 10 large imposing buses, half a dozen jeeps and other vehicles – incidentally, produced in South Korea. The preparations are thorough and, one might suspect, seriously disrupt the city’s routine. The North Koreans can see, albeit from the distance, the visitors – their dress, their height, their behavior. The South Koreans can immediately see how poor the North is. It seems that North Koreans, being necessarily street-smart, also instantly feel the South Korean prosperity.

The waitresses, girls in small stalls and even a handful of genuine guides (not the plaincloth intelligence operatives) who can see the visitors will also notice a lot. Even the willingness of the guests to spend a dollar on a cup of instant coffee or a few cookies is an important sign to them – after all, the average monthly salary in Kaesong is about $4. Those South Korean guests definitely do not look like impoverished victims of evil US imperialism. For a while it will be possible to explain away their extravagant behavior by insisting that those people come from the exploitive elite. But the longer the tours continue, the more difficult the task will become.

So why did the North decide to open Kaesong in the first place? It seems that the major reason is the easy currency income the project brings to Pyongyang. Every visitor pays 180,000 won ($190) – a hefty sum for a one-day bus trip. Out of this amount, 100,000 won goes to the North Korean authorities. All investment into necessary infrastructure is done by Hyundai Asan, so for the North this is easy money. Since 17,000 visitors joined the tours during the first two months of its operations, annual earnings could be in excess of $10 million.

At the same time, they might believe that the Kaesong area has become ideologically contaminated anyway. The Kaesong industrial park is located just a few kilometers from the city. In this facility, some 15,000 North Korean workers are employed in factories owned and run by South Korean capital, largely small businesses which are in desperate need of “cheap labor”.

These workers interact with South Koreans regularly, and they also see life inside the industrial park, which presents a remarkable contrast with their native towns or villages: well-paved roads, trees planted everywhere, modern buildings and round-the-clock supply of water and electricity. Even traffic lights, famously absent from North Korea, are present in this de-facto South Korean enclave.

So why did the North decide to open Kaesong in the first place? It seems that the major reason is the easy currency income the project brings to Pyongyang. Every visitor pays 180,000 won ($190) – a hefty sum for a one-day bus trip. Out of this amount, 100,000 won goes to the North Korean authorities. All investment into necessary infrastructure is done by Hyundai Asan, so for the North this is easy money. Since 17,000 visitors joined the tours during the first two months of its operations, annual earnings could be in excess of $10 million.

The only way to promote change, evolutionary or revolutionary, is to bring North Koreans into contact with the outside world. The North Korean dictator and his elite might see partial exchanges as an easy way to earn money, which is necessary for them to maintain their caviar and cognac lifestyle. In the short term they are probably right. But in the long term, the exchanges will make breaches in the once monolith wall of information blockade. Sooner or later, those breaches will become decisive.

The full articles can be found here:
Tourism boost to North in works
Joong ang Daily
Moon So-young
2/6/2008

A breach in North Korea’s iron curtain
Asia Times
Andrei Lankov
2/7/2008

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Posted in Economic reform, Foreign direct investment, Kaesong Industrial Complex (KIC), Mt. Kumgang Tourist Special Zone, Rason Economic and Trade Zone (Rajin-Sonbong), South Korea, Special Economic Zones (Established before 2013), Tourism | 1 Comment »

Bribery Required to Work at the Kaesong Complex

Tuesday, February 5th, 2008

This should not be a surprise to anyone who is familiar with how socialist and highly regulated economies actually function.  If there is a profit opportunity to be had by breaking a regulation, there will generally be a bureaucrat there willing to pocket some of the earnings to look the other way.

The fact that ordinary North Koreans are willing to pay to get access to Kaesong jobs should send a powerful signal to those who call for the zone’s abolition. Wages and working conditions at the complex, though not popular with Western activists, are relatively better than those on the local collective farm.  When the average Kaesong resident figures out that working there will lead to a better life, baksheesh is inevitable. 

Claudia Rosette covered a similar phenomenon with North Korean loggers in Russia.

The Daily NK covers the Kaesong phenomenon specifically:

Known as a “dream place of employment” among North Koreans, citizens of the North are paying hundreds of thousands of won in the form of bribes to gain employment in the facility.

“They say that one can find a job in the Kaesong Industrial Complex by giving 700,000 North Korean won in bribes for males and 200,000 won for females. If I had used the 200 USD (approximately 700,000 won) spent in obtaining a passport as a bribe, I could have entered the Complex.”

As for the why the Kaesong Complex is so popular, Kim explained, “Commodity provision tickets, equivalent to a worker’s salary, are given to laborers in Kaesong and if one uses these tickets well, he or she can make a huge profit.”

Currently, the official salary for laborers at the Kaesong Industrial Complex is around 60 USD, a small amount of which is distributed as cash and the rest in the form of “commodity provision tickets.”

In the Kaesong Industrial Complex, there are several shops that can only be frequented by Kaesong laborers and the prices at these stores are at inexpensive compared to prices in the jangmadang.

Laborers at the Kaesong Industrial Complex use their “commodity tickets” to purchase products at a cheap price and can make a huge profit by selling the goods, giving the difference to middlemen (currency traders who mediate deals).

Recently, there have even been cases where the middlemen had specific orders for certain items from the Kaesong laborers, asking them to procure a certain amount of rice, oil, and so on. The middlemen can easily make an exorbitant amount of money by selling these goods at the jangmadang.

ADDENDUM REVISITED (The Daily NK is transalted into English and as a result is even less clear than my writing somethimes, so I have revised this post several times to clarify the text):

Opinions of the complex seemingly hinge on one’s policy goals.  If the primary goal is to raise living standards in the North and open the people up to outside influences, then Kaesong seems like progress (although maybe not the most cost effective).  If the primary goal is to minimize the income of the DPRK government, then the Kaesong zone probably is not a good idea…. 

Taking the latter point of view, Joshua at OneFree Korea emphasises the point that  the North Korean government keeps most of the cash wages paid to the workers, and that zone employees survive on the supplemental “commodity tickets”–either consuming the goods they purchase in the company store or selling them to local markets for cash.

Theoretically, though, if the thousands of workers employed in Kaesong were re-selling subsidized goods to the Kaesong public markets, this would have the (short run) effect of lowering or stabilizing food prices for the general public (since Zone employees do not need to purchase food at local markets and their clandestine re-selling of commodities to the markets increases the supply of cheaper goods).  This also means that  in general re-selling to the market is not terribly profitable to any zone employee, except when there is a temporary mismatch beteen supply and demand (which might be common depending on the reliability of the DPRK’s market supply chains).  How the price decrease would affect domestic food producers (and the long term price) is probably a bit more complicated since we are not sure how much North Korean farmers respond to price changes. 

Additionally, even though the North Korean government keeps most of the cash wages, the commodity coupons still give the worker approximately $60 in purchasing power –a decent income in North Korea. 

However, given that the South Koreans pay all cash wages go to the North Korean government and the workers themselves receive an additional $60 in script to use at the company stores, means that the average economic cost of a North Korean worker in  Kaesong is closer to $120/month! 

The whole article can be found here:
Bribery Required to Work at the Kaesong Complex
Daily NK
Jung Kwon Ho
2/4/2008

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Posted in Fiscal & monetary policy, Foreign direct investment, General markets (FMR: Farmers Market), Kaesong Industrial Complex (KIC), Labor conditions/wages, Special Economic Zones (Established before 2013), Uncategorized | 2 Comments »

North Korea: The Columbus complex

Monday, February 4th, 2008

Several days ago, Orascom Telecom issued a press release claiming “that it has been granted the first commercial license to provide mobile telephony services in the Democratic People’s Republic of Korea (DPRK) using WCDMA (3G) technology,” and also claiming, “The DPRK has a population of approximately 23 million of which 67% is between the age of 15 and 64 years, moreover, there is currently no mobile services in the country.”

(Although we won’t know if these demographics are correct until the next census).

However, Dr. Aidan foster Carter took issue with these statements this weekend in the Asia Times…

In 2008, not even North Korea is a cellphone virgin. The DPRK and mobile telephony have a tangled history, starting over a decade ago. (There’s a very useful account as of 2005 at this site.) The tale includes a joint bid in 2002 by several South Korean firms to build a CDMA network in Pyongyang, which sank when Washington made it clear it would not let Qualcomm sell the technology.

That false start apart, our Egyptian Columbus is ignoring, and perhaps usurping, a Thai Leif Ericsson in the shape of Loxley. Back in 1995, the Thai conglomerate set up a 70:30 joint venture, North East Asia Telephone & Telecommunication, with the very same partner Orascom has now bagged, KP&TC. NEAT&T had a 30-year “exclusive” concession – or so it thought.

They’re not the only ones. Hyundai used to vie with Samsung to be South Korea’s biggest chaebol or conglomerate. The group’s northern-born founder, the late Chung Ju-yung, was a pioneer of inter-Korean business. His reward was to be fleeced rotten by Pyongyang, which charged almost a billion dollars for a six-year tourist concession – and then coolly offered bits of it to rival operators like Lotte. As a result, Hyundai splintered into separate firms – and no other chaebol will touch the North with a bargepole. Cheating really doesn’t pay.

But back to the luck of the Loxleys. Having begun with a mainly fixed network in the Rason special economic zone in the northeast, several years later in 2003 Loxley rolled out mobile service in Pyongyang – only to see them banned after a mere six months. That was in May 2004, soon after a huge rail explosion destroyed a swath of the northwestern town of Ryongchon – hours after Kim Jong-il’s train had passed through from China. Officially an accident, one rumor is that this was an assassination attempt triggered by a mobile phone.

Whatever the reason, with service still suspended over a year later, Thailand’s then foreign minister, Kantathi Suphamongkhon, went to Pyongyang in August 2005 to fight Loxley’s corner. He got no joy. North Korea still bars hand-phones, confiscating them from the rare foreign visitor at the country’s Sunan airport and coming down hard on bold souls along the northern border who have illicit mobile phones using Chinese networks. Last October, a factory boss who made international calls from 13 lines – unlucky for some – installed in his basement was reportedly executed in a stadium in front of 150,000 people.

Dr. Foster-Carter gives a great summary of the DPRK’s mobile phone adventures, but I have a couple of data points that flush out the story a bit further.

While visiting Pyongyang in 2005, I personally witnessed an elite North Korean woman (who also claimed to have a reserved room at the Koryo) discretely use a mobile phone, then wrap it in a pink handkerchief a store it in her purse.  Even my guides were shocked, having previously told me that cell phones were recalled for security reasons.  One told me, “She must be special, I am just a normal person.”

Additionally, many journalists to the country are provided with state-sanctioned cell phones to use.  I met a reporter from Reuters who had one.

The full article can be found here:
North Korea: The Columbus complex
Asia Times
Aidan Foster-Carter
2/2/2008

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Posted in Cell phones, Communications, Economic reform, Egypt, Foreign direct investment | 1 Comment »

DPRK’s largest copper mine flooded with difficulties

Saturday, February 2nd, 2008

Institute for Far Eastern Studies
NK Brief No. 08-1-29-1

It is being reported that North Korea’s Chungnyun Mine, in Hyesan, Ryanggang Province, is facing severe economic difficulties due to floodwater. Hyesan mines produce 80 percent of all North Korean copper, and the North had estimated that it will be able to continue mining copper there for the next forty years. Chinese firms in Hebei’s Luan River region had wanted to import 51 percent of Hyesan Chungnyun Mine’s product, but the deal fell through due to opposition from North Korea’s committee overseeing its second (military) economy.

In 1996, during the North’s ‘Arduous March’, electricity was not provided to the mine, leading to flooding in the mineshafts. Since 1998, Kim Jong Il has budgeted 8.2 million USD to dewater the mine, and the mine was recovered using electricity and equipment provided by China.

The mine resumed operations in May, 2004, and in March of last year even an ore-dressing plant and crushing facility were constructed, indicating that there were high expectations that production would grow. However, as water filled up at the dam for the near-by Samsoo Powerplant, completed in May, the mines began to flood again.

There was no end to criticism that the powerplant, located in Jangan-Ri, Hyesan, Ryanggang Province, was to be constructed on a limestone foundation that would leech massive amounts of water, however, as a result of its construction, despite this opposition, water leaks out of the power station and has flooded the mine.

In the event that North Korea abandons the Hyesan Chungnyun Mine, it will be faced with the difficulty of needing to import the large amounts of copper required by the manufacturing industry. As this mine began to flood, North Korea has begun to import most of the copper necessary for its economy from Chile.

Currently, there is no feasible way to technically restore the mine, so as senior authorities in the North are demanding that the mine be saved at any cost, those in charge of operations are said to be uneasy.

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Posted in China, Copper, Finance, Foreign direct investment, Institute for Far Eastern Studies, Mining/Minerals | Comments Closed

Price of Flour Goes Up, So Difficult to Sell Dumplings

Thursday, January 31st, 2008

Daily NK
Yang Jung A
1/31/2008

Due to the food export restraint imposed by China, the price of food items have been rising significantly recently, revealed Good Friends, a nongovernmental organization for North Korea, through a newsletter released on the 30th.

The newsletter relayed, “The price of rice, flour, corn, and grains has been continuously rising due to a systematic adjustment in trade exchange with China. With the Beijing Olympics ahead, the duties on food items have gone up 5% for rice, 20% for corn, and 20~25% for flour.

The newsletter also divulged that “China demands an export permit for grains. Rice and corn are flowing into North Korea because the export permits issued last year still remain in effect. However, China has not yet demanded any export permits for flour, and therefore flour cannot be exported to North Korea.”

“As a result, the price of flour has been increasing rapidly within just a month. In December of last year, the price of flour remained at 1,000 won per unit for the most part, but since the new year, it rose to 1,700 won per unit. People who have been selling bread, dumplings, and snacks have not been able to do business due to the shortage of flour.”

The source relayed, “The North Korean custom house has been requesting a quality verification report on par with international standards at the time of the importing of Chinese food products, but a majority of merchants with whom food is traded has not been able to follow the new standard yet, saying such documents are hard to provide.”

“So, the food items have not been imported into the market, which has caused the price to continuously rise due to the lack of provisions. Nowadays, even if people tried to buy a 1 kg of rice for over 1,400 won, they are unable. Chinese companies who have been dealing with North Korea have predicted that the cease in trading with Chosun (North Korea) will give rise to a food shortage.

The Ministry of Commerce of the People’s Republic of China announced the process of registration and 2008 conditions for registration for milled farming export quarter on the 19th and has implemented a method for the provisional food export of rice, corn, and flour starting January of this year. Related parties of North Korea-Chinese trade forecasted that food exports to North Korea will be reduced significantly as a result of the stringent food export conditions imposed by the Chinese government.

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Posted in 2002 Economic reforms, Agriculture, China, General markets (FMR: Farmers Market), Good Friends, International trade, Price liberalization | Comments Closed

Orascom Telecom Receives First Mobile License in DPRK

Thursday, January 31st, 2008

Orascom Telecom
(Hat tip to Werner)
1/30/2008

Orascom Telecom Holding S.A.E. (“OTH” or “Orascom Telecom”) announced today that it has been granted the first commercial license to provide mobile telephony services in the Democratic People’s Republic of Korea (“DPRK”) using WCDMA (3G) technology.

The license was granted to OTH’s subsidiary CHEO Technology JV Company (“CHEO”) which is controlled by Orascom Telecom with an ownership of 75% while the remaining 25% is owned by the state owned Korea Post and Telecommunications Corporation. The terms of the license allows CHEO to offer services to its customer throughout the country, the duration of the license is 25 years with an exclusivity period of four years. Orascom Telecom intends to invest up to US$400 million in network infrastructure and license fee over the first three years in order to rapidly deploy a high quality network and offer voice, data and value added services at accessible prices to the Korean people. OTH intends to cover Pyongyang and most of the major cities during the first 12 months of operations.

The DPRK has a population of approximately 23 million of which 67% is between the age of 15 and 64 years, moreover, there is currently no mobile services in the country. The operation in the DPRK will complement OTH’s existing operations in Asia and will further enhance OTH’s position as the leading GSM operator in the emerging markets.

Naguib Sawiris, Chairman & CEO, Orascom Telecom, stated “We are continuing to head in the right strategic direction; our Greenfield license in the DPRK is in line with our strategy to penetrate countries with high population and low penetration by providing the first mobile telephony services. OTH has consistently proved its ability to successfully roll out mobile services into countries where no other operator has. OTH will continue to increase shareholder value and maintain its leadership in the markets it operates in.”

About Orascom Telecom
Orascom Telecom is a leading international telecommunications company operating GSM networks in six high growth markets in the Middle East, Africa and South Asia, having a total population under license of approximately 430 million with an average mobile telephony penetration of approximately 37% as at September 30th 2007. Orascom Telecom operates GSM networks in Algeria (“OTA”), Pakistan (“Mobilink”), Egypt (“Mobinil”), Tunisia (“Tunisiana”), Bangladesh (“Banglalink”), and Zimbabwe (“Telecel Zimbabwe”). Orascom Telecom had reached approximately 65 million subscribers as at September 2007.

Orascom Telecom is traded on the Cairo & Alexandria Stock Exchange under the symbol (ORTE.CA, ORAT EY), and on the London Stock Exchange its GDR is traded under the symbol (ORTEq.L, OTLD LI).

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Posted in Cell phones, Communications, Economic reform, Egypt, Foreign direct investment, Orascom Telecom Holding | 3 Comments »

2008 Index of Economic Freedom

Thursday, January 31st, 2008

efindexcover.jpgThe 2008 Index of Economic Freedom published by the Heritage Foundation and the Wall Street Journal covers 162 countries across 10 specific freedoms such as trade freedom, business freedom, investment freedom, and property rights. Unlike the Freedom House rankings, this is an index, meaning there is a first place winner (who should be rewarded with lots of investment and business creation) and a last place “winner” (who should be shamed into moving up the list for the same prizes)

The bottom ten countries:
148. Venezuela
149. Bangladesh
150. Belarus
151. Iran
152. Turkmenistan
153. Burma (Myanmar)
154. Libya
155. Zimbabwe
156. Cuba
157. North Korea  (unchanged)

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Posted in Banking, Economic reform, Finance, Fiscal & monetary policy, Foreign direct investment, Insurance, Joint Ventures, Political economy | Comments Closed

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