Archive for the ‘Economic reform’ Category

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N. Korea Eager for Economic Modernization

Monday, October 29th, 2007

Korea Times
Jung Sung-ki
10/29/2007

North Korea has a keen interest in economic modernization program aimed at luring foreign investment through business cooperation projects with other countries, a member of the European Parliament said Monday.

In a press conference in Seoul, Hubert Pirker, an Austrian member of the European Parliament, said the North clearly understands the fact that without economic modernization, it will not be able to attract foreign investment into the country.

Pirker and two other EU representatives _ Jas Gawronsky of Italy and Glyn Ford of Britain _ visited North Korea from Oct. 20-27 and met the North’s Prime Minister Kim Yong-il. They also held an economic forum with North Korean officials.

During the forum, North Koreans’ attitudes “were not closed or hostile,” said Pirker.

“We visited the railway station, for example, and also parks and restaurants. I could say we could see more modern-style restaurants and more cars than ever before,” the European lawmaker was quoted by Yonhap News Agency as saying.

The European lawmakers discussed ways of modernizing North Korea’s agriculture, light industry, information technology and finance sectors with officials there, Pirker said.

North Korea’s Foreign Minister Pak Ui-chun expressed his wish to visit Europe next year, as Pyongyang seeks to send its young officials and industrial trainees there to learn information technology and other advanced knowledge from European nations, he said.

Pirker said the delegates had advised the North Koreans that upgrading the level of communications and finance systems in the North to global standards was essential to securing foreign investments in a stable manner.

Progress at the six-party talks aimed at scrapping Pyongyang’s nuclear weapons program and expanding inter-Korea economic cooperation would help the North achieve its goal of inviting foreign capital, the legislator added.

The European Union has so far sent about 50 million euros worth of aid to North Korea, he said.

The impoverished North has recently shown strong interest in the economic reform programs of other countries.

Reports said North Korean leader Kim Jong-il expressed intentions last week copying Vietanam’s economic reform and openness policy, called “Doi Moi,” during a meeting with Nong Duc Manh, the secretary-general of the Vietnamese Communist Party, in Pyongyang.

The ongoing visit to Hanoi by the North Korean premier appears to have something to do with Kim’s remarks, they said. The reclusive leader is reportedly planning to visit Vietnam in the near future.

North Korean officials expressed firm commitment to denuclearization under the Feb. 13 nuclear deal, according to Pirker.

Under the pact signed by the two Koreas, the United States, China, Japan and Russia, Pyongyang pledged to disable its nuclear facilities and declare all of its nuclear programs by the end of this year in return for economic assistance and political concessions.

North Korea has received 50,000 tons of heavy fuel oil from South Korea and an equal amount from China for closing five of its nuclear facilities in July. The regime is to receive an additional 900,000 tons of oil or equivalent energy aid if it goes through the second stage of denuclearization.

The EU delegates are scheduled to pay a courtesy call on Prime Minister Han Duck-soo and hold meetings with South Korean business leaders including Hyundai-Kia Automotive Group Chairman Chung Mong-koo before leaving South Korea on Nov. 2.

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Posted in Communications, Computing/IT, Economic reform, EU, Foreign direct investment, Political economy, Price liberalization, Vietnam | Comments Closed

Kim Jong-il Interested in Vietnam-Style Reform Policy

Sunday, October 28th, 2007

Korea Times
Jung Sung-ki
10/28/2007

North Korean leader Kim Jong-il has expressed intention to model after the Vietnam-style economic reform and openness policy, dubbed “Doi Moi,” a report said Sunday.

Vietnam adopted the reform policy in 1986 to establish a market economy such as liberalization of trade and finance with foreign countries, decentralization of state economic management and reliance on the private sector as an engine of economic growth.

Kim made the remarks during a meeting with Nong Duc Manh, secretary-general of Vietnam’s Communist Party, in Pyongyang last week, Yonhap News reported, citing the Sunday edition of the weekly Yazhou Zhoukan, a Hong Kong-based international Chinese business daily. The newspaper carried an interview with Vietnamese Foreign Minister Pham Gia Khiem who accompanied the secretary general on his Pyongyang visit.

“Chairman Kim highly evaluated the achievements Vietnam’s Doi Moi has made in the past 20 years while meeting with Secretary General Manh,” Khiem was quoted as saying, adding the North Korean leader accepted Manh’s proposal for Kim’s visit to Hanoi.

The ongoing visit to Hanoi by North Korean Prime Minister Kim Yong-il aims to prepare for Kim’s visit to Vietnam, the report said.

The North Korean premier, who arrived in Hanoi Friday, visited several industrial and tourist sites in Vietnam, including Halong Bay, one of the biggest tourist attractions for foreigners, reports said.

Diplomatic sources in Hong Kong, however, were quoted as saying it is remarkable that Kim Jong-il expressed an interest in Doi Moi, but it is not likely for the communist North to closely follow the reform program.

The reason why the North is eyeing Vietnam’s economic program could have something to do with China’s lukewarm attitude to Pyongyang’s efforts to build special economic zones near the North’s border with China, they said.

Hanoi’s reform has often been referred to as a model for North Korea’s underdeveloped economy to emulate.

Chief U.S. nuclear envoy Christopher Hill said during a visit there in May that North Korea should “move on in the way that Vietnam has done so well.”

North Korea, Vietnam agree to boost bilateral ties
Yonhap
10/27/2007

North Korea and Vietnam said Saturday they have agreed to forge closer cooperation in the sectors of agriculture, culture and tourism, in their first high-level meeting in five years.

The agreement was reached after a meeting of visiting North Korean Premier Kim Yong-il and Vietnamese Prime Minister Nguyen Tan Dung.

Kim, who is in charge of economic policy, arrived in Hanoi on Friday for a five-day stay, as part of the first leg of a tour to Southeast Asian nations that include Malaysia, Cambodia and Laos.

Vietnam has shifted to a market economy since the mid-1980s and Hanoi’s reform is seen by many as a model for North Korea’s underdeveloped economy to emulate.

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Posted in Banking, Economic reform, Finance, Foreign direct investment, General markets (FMR: Farmers Market), International trade, Price liberalization, Vietnam | 1 Comment »

Economic doldrums, restrictions on hawking cost jobs in N. Korea: aid group

Friday, October 26th, 2007

Yonhap
10/26/2007

North Koreans have been suffering from chronic job shortages due to worsening economic conditions and a recent move by North Korean authorities to limit the number of hawkers for fear of capitalism spreading in the isolated, communist state, an aid group said Friday.

The North has recently forbidden women under the age of 40 from selling merchandise on their own, Good Friends said in its latest newsletter. The previous age limit was 30.

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Posted in 2002 Economic reforms, Black markets, Civil society, Economic reform, Good Friends, Labor conditions/wages, Manufacturing, Price liberalization, Private property | Comments Closed

The Story of a Honorary Soldier Selling Noodles in Pyongyang

Friday, October 26th, 2007

Daily NK
Lee Kwang Baek
10/26/2007

Mr. “Kim,” who lives in Pyongyang, lost a foot in an accident in the army. After his discharge, he became a 1st-class Honorary Soldier of merit living on provisions and bonuses supplied by the nation. The wounded soldiers are named as “Honorary Soldiers” in North Korea. Even before the great famine, Mr. Kim and his family could survive on provisions and bonuses alone. However, after the worsening of the economic situation, they fell into serious hardship.

Nowadays, Mr. Kim steps outside every morning, dragging his one foot, because he has to buy noodles at the “Sunkyokak (a noodles restaurant)” that sells honorary soldiers at a state-assigned price of 230 won. Mr. Kim, who is a first-class honorary soldier, can buy two bowls of noodles at one time.

There is no limit on the number of times one can buy a bowl of noodles. However, with the increase in honorary soldiers living on the profit from noodles bought and resold, the number of bowls Mr. Kim can buy from standing in line all day is only four. Even then, he can sell a bowl which he bought for 230 won for 1,000 and can go home with a slightly upward amount of 3,000 won after selling four bowls.

The subsidies Mr. Kim receives as an honorary soldier every month is 3,000 won. That only comes out to 100 won per day, not even sufficient for a bowl of noodles from Sunkyokak. The cost of living for a family of four is usually 100,000 won (approx. USD30.0), so it is not enough to get by for a month. If one can earn one month’s worth of bonus in a day by selling noodles, there is nothing he can do, besides sell them, but to stand in line all day on crutches.

Until now, North Korea has poured a lot of energy to support for honorary soldiers. After the Korean War, it has guaranteed jobs for soldiers by erecting the Distinguished Soldier Fountain Pen Factory, the Sariwon Honorary Soldier Dressmaker Factory, the Hamheung Honorary Soldier Plastic Products Factory, etc. and to soldiers who have lost their ability to work, it has given provisions and bonuses. Further, it has advertised support for honorary soldiers as the “citizen’s responsibility” and has sought out civilian support.

However, recently, according to North Korean sources, among the guests who come to the Sunkyokak, approximately half are honorary soldiers who resell the noodles. The honorary soldiers demonstrate the fact that survival based on provisions and bonuses alone are impossible.

After the food shortage, an important transformation has taken place in North Korea. The number of people relying on national provisions decreased by around 30% and the rest were placed in situations where they could not survive on provisions, salaries, and bonuses provided by the state alone. At least 100,000 won is needed for monthly living costs, but the salary and bonus that the state can provide is only several thousand won. North Korea has become a society where honorary soldiers who had received the state’s special consideration and support now have to sell whatever they can to survive.

In order to buy four bowls of noodles, Mr. Kim, who has to stand on crutches all day, is the testament of North Korea’s economic system which has crumbled since the food shortage and the rapid deteriorate of whatever grip it does have.

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Posted in 2002 Economic reforms, Arduous March, Black markets, Civil society, Economic reform, Labor conditions/wages, Military, Price liberalization, Restaurants | 1 Comment »

Jangmadang Will Prevent “Second Food Crisis” from Developing

Friday, October 26th, 2007

Daily NK
Kim Min Se
10/26/2007

There is a prospect of the rise of “second food crisis” next year because of the flood disaster and the resulting food shortage.

A senior researcher at Korea Rural Economic Institute, Kwon Tae Jin said warningly, “Unless North Korea comes up with a special plan to secure food supply, there will come another food crisis next year, which is as severe as the one in the mid and late 1990s.”

Kwon anticipated that North Korea would need 5.2 million tons of grain for domestic consumption. Unfortunately, it is expected that North Korea would produce around 3.8 million tons of grain. This means there will be a shortage of 1.4 million tons of grain.

The statistics indicates there is a real possibility of a food crisis. North Korean authorities announced that the flood inundated about 2.2 billion ㎡ of farmland, which accounts for 14 percent of the country’s farmland. It is estimated that 2.2 billion ㎡ of farmland produces at least 500,000 tons of grain.

However, another prospect says that although food shortage is inevitable, it will not lead to mass starvation in North Korea as it did in the mid-1990s. Most of defectors from North Korea said, “Since the mid-2000s, things have changed. There won’t be any serious starvation.” They said that the current situation is different from that of those days under the central food distribution system. They added that the Jangmadang (markets) economy has changed a way for life among North Korea people.

◆ The amount of demand for food is overestimated

It should be double-checked whether North Korea really needs a minimum of 5.2 million tons of grain. There is criticism that the estimate of food demand which was calculated by some South Korean experts on North Korea and relief organizations is unrealistic. It is also pointed out that the estimate is calculated based on the nutrition standard of South Korea.

Defectors said that mass starvation would not have occurred if North Korea had at least a half of 5.2 million tons of grain in the mid 1990s.

Although the international standard for daily nutritional intake is between 2,000 and 2,500 kcal/day, North Korea sets the standard at 1,600 kcal/day, which amounts to 450 grams of grain.

It is easy to estimate the minimum amount of food demand needed in North Korea. Let us say every individual including children and the elderly needs 550 grams of grain per day, which is equal to the daily amount of food distributed to every adult by the state. With the population of 22 million in North Korea, the country then needs 12,100 tons of grain each day and 4.4 million tons of grain per year.

It is known that the North Korean government provides 550 grams of grain for adults and 300 grams for both children and the elderly. According to CIA’s World Fact Book 2004, the population aged between 15 and 64 in North Korea is around 15 million, which accounts for 67.8 percent of total population. This means the population of children and the elderly together reaches about 7 million. If we do the math, we come into conclusion that the amount of food needed in North Korea every year is 3,777,750 tons of grain.

Recall that North Korean people had received the aforementioned amount of food through the state food distribution until early 1990s. Of course, the country did not suffer from mass starvation back then.

The mass starvation during the mid-1990s resulted from huge decrease in food production between 1994 and 1998. In those years, North Korea produced about 2 million tons of grain, which fell far below the needed levels of food production. Hwang Jang Yop, former secretary of the Worker’s Party also testified that in the fall of 2006, while he was still in North Korea, he once heard the secretary of agriculture Seo Kwan Hee worrying about extremely low food production.

Therefore, it is correct to estimate the minimum amount of food needed in North Korea at 3,777,750 tons of grain. If the food production decreases below 3 million tons, then the food prices will skyrocket, and the possibility of mass starvation will be increased.

◆ A New way of life among North Korean people helps prevent them from falling victim to starvation.

North Koran people do not believe in the state authorities any more. The people know that they suffered from horrible starvation because they relied on the state and its food distribution system. During the crisis, many people had desperately waited for food to be distributed until they collapsed and died. Nowadays, North Korean people find a means of living by themselves at Jangmadang.

“There is no free ride” is the words on everybody’s lips in North Korea, which means that everyone must work hard in order to make a living. The lowest class became a day laborer.

The mass starvation of the mid-1990s has brought a significant change into North Korean society. Except a few, most of North Korean people do not rely on the state’s food distribution system. Instead, they have come up with a variety of survival techniques such as engaging in business, illegal trade with China or real estate transactions, receiving support from defected family members, and house sitting.

In that manner, North Korean people make money and use it to buy rice. An affiliate at the Bank of Korea who studies price trends of North Korea said, “Since the adoption of the July 1 Economic Improvement Measure, the price of rice and corn has increased the least.” If the prices go up, people would tighten their belts and decrease their spending on every item except rice. This means they are not that vulnerable to starvation as they used to.

◆ Businessmen are good at securing food.

Recently, a number of rich businessmen have emerged. Some have tens of thousands dollars, and others as many as several million dollars. Groups of Jangmadang businessmen have been organized with these rich businessmen as the leaders.

These businessmen come and go to China as they please and supply food and goods to Jangmadang in North Korea. If the rice price in North Korea is expensive than in China, they buy Chinese rice and sell it at Janmadang. In this way, they help balance supply and demand at the market.

Furthermore, Chinese residents in North Korea and Chinese businessmen also joined the North Korean businessmen as providers at the market. They too sell food produced in China at Jangmadang when food prices go up in North Korea. If possible, they even sell rice reserved for the People’s Army. There was an accusation that the state authorities supplied food aid from overseas for the People’s Army while collecting food produced in North Korea at the same time.

Of course, some businessmen could deliberately keep a hold on food supply anticipating an increase in food prices. However, that kind of unfair activity is temporary. Although it is too early to tell, the “invisible hand” of the market, however small it is, is operating in North Korea and acting as a preventive measure against starvation.

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Posted in Agriculture, Arduous March, Black markets, Economic reform, General markets (FMR: Farmers Market), Political economy, Price liberalization, Public Distribiution System (PDS), Uncategorized | Comments Closed

Ministry streamlines investing in North

Tuesday, October 23rd, 2007

Joong Ang Daily
10/23/2007

Regulatory filing requirements to invest in North Korea will be eased, and the Export-Import Bank of Korea will manage information on investment activities in the North, according to a Ministry of Finance and Economy release yesterday.

For an amount below $300,000, an investor will no longer need to hand in an annual financial report to the bank handling the company’s foreign exchange deals for investments in the North.

For an amount below $1 million, an investor will only need to report briefly.

The bank dealing with foreign exchange transactions will need to report the investor’s financial information to the Export-Import Bank of Korea instead of the Ministry of Unification and the Finance Ministry.

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Posted in Banking, Export-Import Bank of Korea, Finance, Fiscal & monetary policy, Foreign direct investment, RoK Ministry of Unification, South Korea, Special Economic Zones (Established before 2013) | Comments Closed

Kaesong factory-apartment opens new horizons for inter-Korean cooperation

Tuesday, October 23rd, 2007

Yonhap
Lee Joon-seung
10/23/2007

A newly opened factory-apartment at the Kaesong Industrial Complex promises fresh possibilities for inter-Korean business cooperation, the developer of the facility said Tuesday.

The state-run Korea Industrial Complex Corp. (KICOX) said the dual-purpose manufacturing and residential facility is specifically designed for small and medium enterprises (SMEs) that are currently being phased out of South Korea due to the lack of workers and high labor costs.

At the formal opening ceremony of the factory-apartment, KICOX President Kim Chil-doo said, “The new facility provides an ideal business model for South Korea’s labor-intensive SMEs trying to stay afloat, and is an ideal means to start off business in North Korea.” About 300 people from South Korea were present at Tuesday’s opening in Kaesong, including lawmakers and Vice Industry Minister Oh Young-ho.

The 32 companies that will use the new facility are generally small clothing companies that were at the critical juncture of deciding whether to move to China and Southeast Asian countries, or close their businesses altogether. The factory-apartment provides an alternative means to continue making goods and is beneficial to all sides, the developer said.

By moving to Kaesong, the companies can stay in business by hiring workers for about US$60 a month, while 2,700 North Korean workers benefit from new jobs. In addition, the dual arrangement permits cheaper operating costs, a better working environment and allows companies to cooperate with each other for logistics support, said the developer.

The corporation, which runs 11 similar factory-apartments in South Korea, said the five-story building covers 27,880 square meters and was built in 14 months at the expense of 21.1 billion won (US$22.8 million). It is equipped with a storage area, a training center, a product display room, two dining halls, a store and fitness center. The new building is equipped with 71 dormitories for South Korean workers and various support staff.

The monthly rent in the factory-apartments is 4,500 won (US$4.9) per square meter, and there are six different floor arrangements available, ranging from 396 to 1983 square meters.

KICOX said that based on the projected success of the first factory-apartment, up to seven more will be built in Kaesong by 2010. It said 19,489 square meters of land were reserved in May 2007 for the project.

A second factory-apartment is being built the Kaesong Industrial District Management Committee (KIDMAC), and is scheduled for completion by late 2008.

Companies that have moved into the new factory-apartment, meanwhile, said they are satisfied with the proficiency of workers and cheap labor costs.

Ok Sung-seok, president of Nine Mode Co. and chairman of the corporate management committee at the KICOX factory, said Kaesong plants cost a third less to operate than similar plants in China. He added that his shirt-making company should turn a profit by next year.

“I ran a factory in Qingtao, China for four years, but the operating cost there is skyrocketing,” the businessman said. He said Nine Mode closed its Chinese factory and plans to downsize its operations in Seoul so it can concentrate on its efforts in Kaesong.

Ok said that depending on the type of business and size, four or five factories in the factory-apartments should turn a profit by the end of the year.

The Kaesong complex lies 60 kilometers northeast of Seoul, and is hailed as the crowning achievement of the historic 2000 inter-Korean summit. It has played a key role in expanding two-way economic exchange that stood at just $300 million in 1999 to $1.35 billion last year.

Construction of the industrial district began in June 2003, with 3.3 square kilometers of factory land have been built to house up to 450 firms. By 2012, 11.6 square kilometers of industrial park is to be laid down that can hold several thousand South Korean factories and hire over 200,000 North Korean workers.

There are at present about 13,000 North Korean workers employed by 57 South Korean firms in Kaesong that have churned out garments, watches, kitchen utensils, auto parts and other labor-intensive goods since 2004.

The complex just north of the demilitarized zone that separates the two Koreas has been in the spotlight after the second inter-Korean summit. South Korean President Roh Moo-hyun and North Korean leader Kim Jong-il agreed to build a region of peace and prosperity centered around Kaesong and the North Korean city of Haeju, 75 kilometers west of Kaesong.

“People at Kaesong expect progress to be made in such areas as communications and travel, which had previously been an obstacle to the development of the industrial district,” said a KIDMAC official. The prime ministers of the two sides are to meet in November to implement follow-up measures to the summit.

There is only one telephone line linking Kaesong with Seoul, while no mobile phones are allowed in the area. People and materials are also prevented from moving in and out of the complex.

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Posted in Communications, Kaesong Industrial Complex (KIC), Korea Industrial Complex Corp. (KICOX), Labor conditions/wages, Manufacturing, Special Economic Zones (Established before 2013), Telephones | Comments Closed

Privileged Pyongyang Citizens No Longer Enjoy Privileges in the Market.

Monday, October 22nd, 2007

Daily NK
Lee Sung Jin
10/22/2007
(Click on image for original size)

dprkmarketprices.jpgAccording to DailyNK’s research on prices in North Korea conducted in late September, the prices in Pyongyang are similar to the prices in other parts of the country. The finding shows that Jangmadang (markets) economy has been going through integration and similar distribution process across North Korea.

In the past, domestic commodities were sold cheap, and foreign products were sold expensive in Pyongyang.

DailyNK has been conducting quarterly research on prices in the central such as Pyongan Province and Hamkyung Province and northern areas.

This time the research result shows that the price of rice in a Jangmadang in Pyongyang is 1,350 won/kg, which is similar to the price of rice in Sinuiju, 1,400won/kg. In North Korea, the rice price serves as a gauge for price trends.

In Pyongyang, the exchange rate is about 330 thousands won to 100 dollars, which is the same as the exchange rate in other places. The most famous imported cigarettes, Cat (Craven A) is sold at the same cost of 1,500 won in Pyongyang and other areas.

Subsidiary food is more expensive in Pyongyang. The price of cabbage is 400 won/kg, 50 won/kg higher than cabbage price in Sinuiju. The price of pork ranges from 3,500 to 4,000/kg, 500~1,000 won/kg higher than the pork price in other areas.

The prices of seafood such as brown and green seaweed, and dried Pollack are cheaper in Pyongyang. Seafood caught in Kangwon Province and neighboring areas is transported to markets in Pyongyang in refrigerator car. Since the demand is high, seafood is sold in great quantities, and the price remains low in general.

Movie ticket prices range from 200 to 400 won. Telephone service is charged five won per minute. Overall, the price range for each commodity is high, and many different kinds of goods are available in Jangmadang.

Imported items from China such as socks, sports shoes, or underwear are expensive being sold at a cost of 1,000 won in Pyongyang. That is because there are extra shipping rates and labor costs imposed on Chinese goods transported to Pyongyang. On the contrary, in Sinuiju, imported goods from China are circulated on the market right away.

Often, retail prices are higher in Pyongyang because of high levels of consumption among Pyongyang citizens. However, cigarettes or liquor produced in Pyongyang, or clothes from South Korea circulated to other areas via Pyongyang are sold cheap in Pyongyang.

However, in these days the differences in regional price levels have almost disappeared.

A defector from Pyongyang, Ahn Chul Min (a pseudonym) who came to South Korea in 2006 said, “Prior to 2002, there were individuals who hung around from place to place and made money on price differences. But nowadays, the retail prices are almost uniform across the country because people just use a telephone and find out where to get items they want at what prices.

“Since there is no big difference in retail prices, retailers are not doing well in business,” Ahn added, “Instead, individuals driving a truck and selling goods wholesale are making good money.”

Ahn said, “Not everyone who lives in Pyongyang is well-to-do. Despite of their locations whether in Pyongyang or Chongjin, all markets have goods from South Korea and China. The poor people even if they live in Pyongyang should buy cheap and low quality of products from China. In contrast, those who live in Chongjin and have money can buy goods from South Korea anytime.”


Market Prices Consistent Throughout DPRK
Institute for Far Eastern Studies (IFES)
NK Brief No. 07-10-25-1
10/25/2007

The results of a survey conducted by Daily NK on the price of goods in Pyongyang at the end of September show that prices in the capital were similar to those in rural areas. This is an indication that markets throughout the country are integrated, and evidence that goods can be circulated from region to region.

In the past, the price of domestic goods in Pyongyang was relatively cheep, while imported goods were sold at high prices. During that time, Daily NK carried out local price surveys in central regions such as Pyongan and Hamkyung provinces, as well as in northern areas. According to this latest survey in Pyongyang, the cost of one Kg of rice, the standard measure of the cost of goods in North Korea, was 1,350 won, similar to the 1,400 won price in Sinuiju, and the 1,250 won cost in Hyeryung. An exchange rate of 3,300 won per USD is also in line with rural exchange rates, as is the 1,500 won price tag on a pack of Craven A cigarettes, the most favored imported cigarette in North Korea.

Non-essential food goods are more expensive in Pyongyang than in outlying areas, with one Kg of lettuce selling for 400 won, 50 won more than in Sinuiju. Also, pork in the capital runs between 3,500 and 4,000 won per Kg, which is 500 to 1,000 won more than it would cost elsewhere in the country.

On the other hand, seaweed, dried Pollack, and other marine products are cheaper in Pyongyang than elsewhere. Ocean harvests from Kangwon and neighboring provinces are brought to Pyongyang markets by way of refrigerated trucks. Because of high demand, a variety of goods get delivered, yet overall, prices are held fairly low.

Overall, the price range on a particular ware was very wide, indicating that there was a variety of products available in the markets. The survey found that goods such as undergarments, socks, sneakers imported from China were selling for the high cost of 1,000 won each. In Sinuiju and other northern areas, goods from China are brought directly to markets, but by the time these same goods reach Pyongyang, additional labor and transportation costs force prices up. Pyongyang residents typically have more money to spend than those in rural areas, also leading vendors to raise prices on some goods, however cigarettes and alcohol produced in Pyongyang and distributed to rural areas, as well as South Korean goods which reach DPRK markets by way of Pyongyang, are slightly less expensive in the capital.

Recently, regional price differences have nearly disappeared. Prior to 2002, some traders earned their living traveling from region to region exploiting price differences. However, now with one simple phone call, North Koreans can find out where and for what price goods are being sold, leading the majority of retail prices to be similar throughout the country.

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Posted in 2002 Economic reforms, Agriculture, Black markets, Economic reform, Film, Finance, Fiscal & monetary policy, General markets (FMR: Farmers Market), Light Industry, Manufacturing, Price liberalization, Telephones, Uncategorized | Comments Closed

DPRK Chamber of Commerce

Saturday, October 20th, 2007

The DPRK Chamber of Commerce was inaugurated on August 25, 2004 with the purpose of developing economic and trade relations with different countries over the world.

The Pyongyang Chamber of Commerce (PCC), the predecessor of the DPRK Chamber of Commerce, had been established on March 1, 2000 and granted an associate membership of the International Chamber of Commerce (ICC) at its 33rd World Congress held in Budapest, Hungary in May, 2000.

The PCC had conducted such service activities as trade, finance, arbitration and consultation helpful to the domestic and foreign trade and economic organizations in close relations with the ICC, national chambers of commerce and world trade and economic centres.

It was registered in the directory of addresses published by the ICC, the International Trade Centre and other international economic organizations.

With a view to expanding exchange and cooperation with foreign countries in all fields of the economy, the PCC was developed into the Chamber of Commerce of the Democratic People’s Republic of Korea.

At present, it is extensively carrying on its commercial business in closer ties with the ICC and national chambers of commerce around the world.

The DPRK Chamber of Commerce makes efforts to promote bilateral and multinational exchange and investment with Korean joint venture and individual enterprises in foreign countries as its full members and with foreign individual enterprises and entrepreneurs residing in Korea, overseas compatriots and foreign enterprises who hope to have business transactions with Korean partners as its associate members.

It has an organizational structure consisting of secretariat, trade information committee, trade arbitration committee and exhibition committee as well as non-permanent credentials committee for full members or associate members.

The trade information committee engages in such business as collection and distribution of information data on world economy and trade, international commodity and financial markets.

The trade arbitration committee handles correct examination and settlement of disputes relating to economy and trade.

The exhibition committee organizes the opening of national trade fairs at home and abroad and provides every convenience for the participation of its members in the fairs.

The DPRK Chamber of Commerce will make a positive contribution to the promotion of foreign trade, invitation of investment and economic exchange with other countries.

——

The DPRK Chamber is headed by Ri Hak Gwon.  I have been unnable to determine any other posts he might have held in the past.

——

The Chamber has two addresses on line:

DPRK Chamber of Commerce
c/o Ministry of Foreign Trade
Central District
Pyongyang
D.P.R. of Korea
E-Mail: [email protected]
(This address seems to indicate it is an office within the Ministry of Foreign Trade)

DPRK Chamber of Commerce
Jungsong-dong, Central District,
Pyongyang, DPR Korea
P.O.Box 89
Tel: 850-2-3815926
Fax: 850-2-3815827
E-mail: [email protected]

——–

Externally, the DPRK Chamber liases with numerous external business organizations to promote DPRK exports and foreign direct investment (FDI):

European Business Association

The EBA cooperates with the DPRK Chamber of Commerce and supports it as well as the Korea International Exhibition Corporation under the Ministry of Foreign Trade to help European companies participate [in the Pyongyang International Trade Fair].  European companies participating at the European booth [in the most recent fair] said they were very satisfied. European businesses that would like to participate at the European booth during the next trade fairs (11th PYONGYANG SPRING INTERNATIONAL TRADE FAIR, May 12 – 15, 2008 and the and the 4th PYONGYANG AUTUMN INTERNATIONAL TRADE FAIR, September 22 – 25, 2008) are welcome to contact EBA from now on. Details on these fairs will also be given shortly on the EBA-website under “Services”

Friedrich Nauman Foundation

“It is a great honour and a token of both appreciation and trust” , said Mr. Kim Myeong-ho, Deputy Director of the Department of International Relations of the Korean Workers’ Party welcoming two representatives of the Friedrich Naumann Foundation at the Headquarters of the Korean Workers’ Party (KWP) in Pyongyang. Since their meeting at the beginning of February this year the international political situation has changed dramatically: the February 13 Agreement on the Denuclearisation of the Korean peninsula was signed between the six parties DPR Korea, USA, China, Republic of Korea, Japan and Russia. Meanwhile, the parties have taken necessary steps to ease the tensions on the Korean Peninsula and to move towards denuclearization. Both the U.S. and the DPR Korea have started negotiations on the normalisation of bilateral relations within the framework of the Six-Party Talks. Finally, both Koreas agreed to hold a second summit on 2-4 October.

Mr. Kim Myeong-ho expressed his appreciation of the training activities of the Friedrich Naumann Foundation in the DPR Korea. Referring to the New Year’s editorial of the Rodong Shinmun, the KWP’s newspaper, he mentioned the priority of modernizing the economy in the sectors of agriculture, light industry, IT and banking. According to him, of particular interest are methods of farm management, renewable energy and food security but also city management.

The representatives of the KWP accepted FNF’s offer of having a study tour to Germany for party officials in 2008 presuming further progress in the Six-Party Talks. The members of the delegation would have “fresh ideas” after being back in the DPR Korea, FNF was told.

Walter Klitz, Resident Representative of the Friedrich Naumann Foundation in Korea, also had meetings with representatives of the Ministry of Foreign Affairs and the DPRK’s Chamber of Commerce. In cooperation with the European Union, FNF will hold the 3rd EU-DPRK Economic Workshop in October, its fourth seminar this year.

Here is the agenda for a training seminr held last April. Here is their summary of the event.

New Clients:

South-North Korean Economic Cooperation Forum

A major South Korean business organization said Thursday (Sept. 27) it plans to form a civilian body for economic cooperation with North Korea on the occasion of the 2007 South-North Korean Summit next week.

The envisioned body, tentatively named the South-North Korean Economic Cooperation Forum, is to be set up in October and have 50 members, including 35 entrepreneurs, the Korea Chamber of Commerce and Industry (KCCI) said.

It would be the first non-governmental channel for inter-Korean economic cooperation. Currently, the South’s Ministry of Unification and the North’s National Economic Cooperation Federation are the sole channels for inter-Korean economic cooperation.

“The establishment of the body is designed to further promote inter-Korean economic cooperation on a civilian level,” said Kim Sang-yeol, vice chairman of the KCCI.

The planned group will conduct economic cooperation projects with the North and help improve North Korea’s investment environment, the KCCI said.

To that end, the chamber will try to sign a deal with its counterpart, the DPRK Chamber of Commerce, and send an investment inspection team to the North after the end of the summit. DPRK is the acronym for the North’s official name, the Democratic People’s Republic of Korea.

Established in March 2000, the chamber of commerce, which includes members of 100 major companies, has carried out external economic exchanges and attracted foreign investment in the North, according to the KCCI.     

South Korean President Roh Moo-hyun is scheduled to meet North Korean leader Kim Jong-il from Oct. 2-4 in Pyongyang. Seoul has hinted that the promotion of economic cooperation will be high on the agenda of the 2007 South-North Korean summit, as it was in the first summit in 2000.

Alejandro Cao de Benos

In his own words: “[The KFA is] looking into development of new areas to expand into, especially those related to economy that are critical also for the development and life improvement of the DPRK. Since KFA has played an important role in building friendship, now we also can play our part in building business.

For accomplishing this goal, I announce the creation of the IKBC (International Korea Business Center).  As a sister organization of the KFA, the IKBC will strictly take care of business issues, facilitate business information to private investors and companies around the world.

In close collaboration with the DPRK Chamber of Commerce, IKBC will become the reference link between the DPRK and foreign businessmen. The spirit is to build a DPRK Chamber of Commerce outside the DPRK that will approach the countless possibilities in trading that will benefit all sides involved.

Alejandro’s involvement raises questions about the relationship between the DPRK’s cultural diplomatic efforts (since he is a client of the Committe for Cultural Relations with Foreign countries) and its business outreach efforts auspiciously under the Ministry of Foreign Trade.  I suspect that various DPRK agencies have been blurring the boundries between the two activities for fiscal reasons.  As access to hard currency comes to play a greater role in the DPRK system, I predict that we will see more of this kind of mission creep on the DPRK side.

They also undertake external activities:

A delegation of the DPRK Chamber of Commerce (KCC) took part in the 5th China International Equipment Manufacturing Exposition on Aug. 29, 2006 and the 2nd China Jilin Northeast Asia Investment & Trade Exposition on Sep. 2, 2006.

During its participation in the expositions, the delegation held an interview on investment and discussed matters of investment in the development of a vanadium mine, stone dressing, the production of agrochemicals and calcium carbonate, seafood breeding and processing and so on.

The KCC secretary-general made an introductory speech entitled “On the trade and investment policy of the DPR Korea”.

At the interview, a series of technical matters on joint ventures and processing trade as well as investment guaranty were discussed and agreed between traders.

A trade and investment seminar for European businessmen was held in Pyongyang under the sponsorship of the KCC on October 30, 2006.

There was the general explanation on the DPRK trade and investment policy and the investment environment.

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Posted in Chamber of Commerce (DPRK), Committee for Cultural Relations with Foreign Countries, Economic reform, European Business Association, Foreign direct investment, Friedrich Naumann Foundation, Ministry of Foreign Trade, Pyongyang International Trade Fair, South-North Korean Economic Cooperation Forum | Comments Closed

Market Prices Are Skyrocketing in North Korea

Friday, October 19th, 2007

Daily NK
Lee Sung Jin
10/19/2007

Prices.jpgA study reveals that market prices have skyrocketed in North Korea since the massive flood disaster in August.

According to the study conducted by DailyNK in late September this year, the rice price in the northern part of North Korea increased by 500 North Korean won on average between early July and September. In the market in Sinuiju of North Pyongan Province, the rice price rose from 980 Won/kg to 1,400 Won/kg.

The price of imported rice from China also went up to 1,250 won/kg. The rice from South Korea was sold at 1,450/kg. In Gwaksan of North Pyongan Province, the domestic rice was sold at 1,370/kg, the rice from China at 1,500/kg, the rice from South Korea at 1,300/kg.

In Hoiryeong of North Hamkyung Province, the price of domestic rice was 900 won/kg in July but rose to 1,250 won/kg. In Kilju of North Hamkyung Province, the domestic rice was sold at 1,200 won/kg. This shows that the rice price in North Hamkyung Province did not increase as highly as the price in Sinuiju of North Pyungan Province. In Hoiryeong, the price of rice has been rising steadily from 820 won/kg in March.

The rice in Hoiryeong is cheaper than in Sinuiju because demand for corn is relatively high and food distribution is partly being operated in Hoiryeong.

Between July and late September, the price of wheat also rose from 900 won to 1,200 won, and the price of noodles from 1,000 won to 1,600 won. However, the price of whole corn, the staple food for the low-income families remained stable for the same period.

It was believed that the surge in food prices resulted from the massive flood damage which stroke North Korea in early and middle August. When vast areas of land in South Pyongan and Hwanghae Province, the major granary of North Korea, were submerged during the flood, it was expected that domestic crop production would decrease.

After the food crisis in 1990s, the demand for rice increases in every fall during which rice price is low and people tend to purchase in advance one-year supply for food. In this fall, however, the price of rice greatly rose because the shortage of food was anticipated.

Meanwhile, the surge in rice price illustrates that overseas food aid was not distributed to the people of North Korean. The illicit sale of rice originally distributed to the party cadres or People’s Army has not been fully activated in the market. In addition, the rise in rice price was triggered by the fact that the number of wholesalers stocking up rice in advance increased with the news that there would be a shortage of food.

In early August, the price of rice once surged to a high of 1,950 won/kg in the market in Sinuiju. Thereupon, there was a rumor going around that the rise in rice price resulted from the state’s ban on rice sale and had nothing to do with the flood. Anyhow, the rice price has been on the decrease since then, and in September it had remained at around 1,500 won/kg.

As opposed to the rise in rice price, the price of corn, the main diet for the low-income families remained stable. This means the possibility of massive starvation in North Korea is low this year. Moreover, that the corn price remained moderate when rice price went up by 500 won reflects that the economic situation of middle class has been stabilized over the years.

Along with the rise in food prices, the prices of industrial products or others have been soaring sharply. The price of pork increased from 2,300 won/kg to 3,000 won/kg, and the price of frozen Pollack from 3,500/fish to 4,800/fish

The prices of brown seaweed or fruit juice went up to around 2,000 won each. The price of the popular imported cigarettes, Cat, rose by 200 won being sold at a cost of 1,500 won.

As winter is coming soon, the heating fuel price increased. Brown coal was sold at a cost of 1,300 won for 20 kg, gasoline at a cost of 3,000 won/liter

The exchange rate also increased from one dollar to 3,100 won to one dollar to 3,300 won.

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Posted in Agriculture, Economic reform, General markets (FMR: Farmers Market), Price liberalization, Public Distribiution System (PDS) | 1 Comment »

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