North Korean Economy Watch

The Guardian
Julia Kollewe
6/8/2007

British American Tobacco is pulling out of North Korea, but insisted the move had nothing to do with political pressure.

The world’s second largest cigarette group, whose brands include Lucky Strike, Kent and Dunhill, said it had agreed to sell its 60% share in Taesong BAT, its joint venture in Pyongyang with the Korea Sogyong Chonyonmul Trading Operation, a state-owned company.

BAT is selling the stake to SUTL, a Singapore-based trading group that invests in business ventures in South East Asia. The price has not been agreed yet but will be small in relation to the group. The sale is expected to be completed later this year.

Read their press release here.

Korea Times
Ryu Jin
6/7/2007

More than 1.5 million tourists have so far visited Mt. Geumgang in North Korea since the tour was launched about a decade ago, Hyundai Asan said Thursday.

Since the launch in November 1998, the accumulated number of tourists to Mt. Geumgang reached 500,000 in November 2002, 1 million in June 2005 and then 1.5 million in June this year, according to the South Korean operator of the inter-Korean tourism project.

Company officials hailed the latest achievement, which came just after the start of a new tour program to inner Mt. Geumgang, better known as “Naegeumgang’’ in Korean, early this month.

“We will hold a weekend concert this Saturday at the multi-purpose cultural center in the resort complex of Onjeong-ri,’’ a Hyndai Asan spokesman said. “Famous pop singers and bands, including Nam Jin, and rock band No Brain will be there.’’

As part of efforts to promote the Mt. Geumgang tour program, Hyundai Asan has held various cultural events in recent months including concerts and previews of films.

Mt. Geumgang, which has long held both aesthetic and spiritual allure for Koreans, can be divided into three parts: Naegeumgang (inner, western part), Oegeumgang (outer, eastern part) and Haegeumgang (seashore part).

Since the first tour to Oegeumgang in 1998, an increasing number of visitors have made the trip to the resort area. Most were South Koreans; fewer than 8,000 visitors came from 48 other countries.

But the inter-Korean tourism business has often been affected by the security situation on the Korean Peninsula. For example, it ran into difficulties when North Korea conducted a nuclear test in October last year.

Amid the heightened tension, the number of tourists plummeted to some 240,000 last year, putting a damper on Hyundai Asan’s target of securing more than 400,000 visitors annually.

On June 1, the company started a new tour program, which allows visitors to taste the elegance of the inner part of the 12,000-peak auspicious mountain. Hyundai Asan CEO Yoon Man-joon expressed his ambition during a pilot tour late last month where some 150 dignitaries and media took part.

“We set the target at 400,000 again this year. About 15 to 20 percent of the tourists are expected to visit Naegeumgang this year,’’ Yoon said. “I hope the launch of the Naegeumgang tour will give us an opportunity for a second leap toward successful Mt. Geumgang tour business.’’

Hyundai Asan officials said about 100,000 people have made the trip to the mountain by the end of May. They expect that the figure could reach the target as the high-demand season — from June to October — is approaching.

Each group for the two-night, three-day Naegeumgang tour will be made up of up to 150 visitors and the departure days are every Monday, Wednesday and Friday.

On the first day, the visitors would check in at the hotel and enjoy the North Korean acrobatics show and dine on unique North Korean food for supper. On the second day, they would explore the beauty of Naegeumgang, followed by a brief trip to Oegeumgang on the last day.

Yoon said the company would also try to revamp tour programs to draw more younger visitors as part of its new marketing strategy for the existing tour to the outer side of the mountain, Oegeumgang.

“We will continue to host various cultural events, including concerts and cinema previews, to meet expectations of customers in various age groups,’’ said a company spokesman. “These efforts will also help the company advance to two million visitors.’’

Asia Times
Andrei Lankov
6/5/2007

It is clear that the current Western approach to dealing with North Korea is not working. Some people in Washington obviously still believe that financial or other sanctions will push the North Korean regime to the corner and press Pyongyang into relinquishing its nuclear program. But this is very unlikely.

First, neither China nor Russia is willing to participate in the sanctions regime wholeheartedly. Neither country is happy about a nuclear North Korea, but they see its collapse as an even greater evil. However, without their participation, no sanctions regime can succeed. More important, South Korea, still technically an ally of the United States, is even less willing to drive Pyongyang to the corner. And finally, even if sanctions have some effect, the only palpable results will be more dead farmers. The regime survived far greater challenges a decade ago when it had no backers whatsoever.

So what can be done? In the short run, not much. Like it or not, Pyongyang will remain nuclear. There might be some compromises, such as freezing existing nuclear facilities, but in general there is no way to press North Korean leaders into abandoning their nuclear weapons.

This is not good news, since it means that the threat will remain. Earlier experience has clearly demonstrated that every time North Korean leaders run into trouble, they use blackmail tactics, and they usually work. In all probability, there will be more provocations in the future. Since Pyongyang’s leaders believe (perhaps with good reason) that Chinese-style economic reforms might bring about the collapse of their regime, they have not the slightest inclination to start reforming themselves.

This leaves them with few options other a policy aimed at extracting aid from the outside world, and regular blackmail is one of the usual tools of this approach. Thus the threat persists unless the regime or, at least, its nature is changed, but how can this goal be achieved if pressure from outside is so patently inefficient? The answer is pressure from within, by nurturing pro-democracy and pro-reform forces within North Korean society (and also pro-reform thoughts within the brains of individuals).

Of all assorted “rogue regimes”, North Korea is probably most vulnerable to this soft approach. On one hand, unlike the bosses of the assorted fundamentalist regimes, North Korea’s leaders have never claimed that their followers will be rewarded in the afterlife; they do not talk, for example, about the pleasures of otherworldly sex with 72 virgins.

Their claim to legitimacy is based on their alleged ability to deliver better lives to Koreans here and now, and Pyongyang’s rulers have failed in this regard in the most spectacular way. The existence of another Korea makes the use of nationalistic slogans somewhat problematic as well.

North Korea’s leaders cannot really say, “We have to be poor to protect our independence from those encroaching foreigners,” since the existence of the dirty-rich South vividly demonstrates that under a reasonably rational government, Koreans can be both rich and independent (and also free).

This leaves Pyongyang with no choice but to seal the borders as tight as no other communist regime has ever done before, on assumption that the common folk should not know that they live a complete lie. This self-imposed information isolation is the major condition for the regime’s survival, and breaking such a wall of ignorance should be seen as the major target for any long-term efforts directed at bringing change to North Korea.

The power of soft measures is often underestimated, not least because such policies are cheap, slow and not as spectacular as commando raids or even economic embargoes. However, their efficiency is remarkable.

In this regard, it makes sense to remember a story from the relatively recent past. In 1958, an academic-exchange agreement was signed between the Soviet Union and the United States. Back then the diehard enemies of the Soviet system were not exactly happy about this step, which, they insisted, was yet another sign of shameful appeasement.

They said this agreement would merely provide the Soviets with another opportunity to send spies to steal US secrets. Alternatively, the skeptics insisted, the Soviets would send diehard ideologues who would use their US experience as a tool in the propaganda war. And, the critics continued, this would be done on American taxpayers’ money.

The first group of exchange students was small and included, as skeptics feared, exactly the people they did not want to welcome on to US soil. There were merely four Soviet students who were selected by Moscow to enter Columbia University for one year of studies in 1958. One of them, as we know now, was a promising KGB operative whose job was indeed to spy on the Americans. He was good at his job and later made a brilliant career in Soviet foreign intelligence.

His fellow student was a young but promising veteran of the then-still-recent World War II. After studies in the US, he moved to the Communist Party central bureaucracy, where in a decade he became the first deputy head of the propaganda department – in essence, a second in command among Soviet professional ideologues.

Well, skeptics seemed to have been proved right – until the 1980s, that is. The KGB operative’s name was Oleg Kalugin, and he was to become the first KGB officer openly to challenge the organization from within. His fellow student, Alexandr Yakovlev, a Communist Party Central Committee secretary, became the closest associate of Mikhail Gorbachev and made a remarkable contribution to the collapse of the communist regime in Moscow (some people even insist that it was Yakovlev rather than Gorbachev himself who could be described as the real architect of perestroika.)

Eventually, both men said it was their experiences in the United States that changed the way they saw the world, even if they were prudent enough to keep their mouths shut and say what they were expected to say. So two of the four carefully selected Soviet students of 1958 eventually became the top leaders of perestroika.

There is no reason to believe that measures that worked in the Soviet case would be less effective in North Korea. Academic exchanges are especially important, since the policy toward North Korea should pursue two different but interconnected purposes. The first is to promote transformation of the regime or perhaps even to bring down one of the world’s most murderous dictatorships. However, it is also time to start thinking about what will happen next, after Kim Jong-il and his cohorts vanish from the scene.

The post-Kim reconstruction of North Korean will be painful, expensive and probably lengthy. Right now North Korea is some 20 times a poor as the South, and the gap in education between two countries is yawning. With the exception of a handful of military engineers, a typical North Korean technician has never used a computer.

North Korean economists learn a grossly simplified version of 1950s Soviet official economics, and North Korean doctors have never heard about even the most common drugs used elsewhere. This means that in the case of a regime collapse, the North Koreans would be merely cheap labor for the South Korean conglomerates – a situation bound to produce tensions and hostility between the two societies. A North Korean who in 20 years’ time will look for a decent job should be made employable, and the best way to ensure this is to start thinking about his or her education right now.

Academic exchanges with North Korea would have dual or even triple purposes. First, they would bring explosive information into the country, hastening domestic changes (probably, but not necessary, changes of a revolutionary nature). Second, they would assist North Korean economic development, thus beginning to bridge the gap between the two Koreas even while the North was still under Kim Jong-il’s regime. Third, they would contribute to more efficient and less painful reconstruction of post-Kim North Korea.

Of course, all these scholarship programs should be paid for by the recipient countries. North Koreans have no money for such exchanges (and to paraphrase a remark by North Korea expert Aidan Foster-Carter, North Korean leaders are people who never do anything as vulgar as paying). But all three targets are clearly in the interest of the world community, and anyway the monies involved would be quite small.

North Korea’s leaders are no fools. They understand that such exchanges are dangerous, and they do not want future Korean Yakovlevs and Kalugins to emerge. Back in 1959-60 they even decided to recall their students from the Soviet Union and other countries of the Communist Bloc and did not send their young people to study anywhere but in Mao Zedong’s China until the late 1970s. In other words, for two decades Pyongyang’s leaders believed that those countries were way too liberal as an environment for their students.

However, they also understand that without exchanges they cannot survive in the longer run. Even now, Pyongyang is doing its best to increase exchanges with China, sending numerous students there.

Another important factor is endemic corruption. There is no doubt that nearly all students who will go overseas will be scions of the Pyongyang aristocrats, the hereditary elite that has been ruling the country for decades. A high-level official might understand that sending a young North Korean overseas is potentially dangerous. But if the person in question is likely to be his nephew, he will probably choose to forget about the ideological threats.

Of course, no sane North Korean leader would ever agree to send students to the US or to South Korea. However, there are many countries that are far more acceptable for them. The Australian National University a few years ago had a course for North Korean postgraduate students who studied modern economics and financial management. Australia or Canada or New Zealand might be good places for such programs.

While English-language education is preferable, since English is the language of international communication in East Asia, there is a place for European countries as well, especially smaller ones, whose names do not sound too offensive to the Pyongyang bureaucrats – such as Switzerland or Hungary or Austria.

Such programs should be sponsored by those countries whose stakes are the highest, such as the US, Japan and South Korea, but smaller and more distant countries also should consider sponsoring such an undertaking. This is not a waste of money, nor even a good-looking humanitarian gesture for its own sake. As history has shown many times, former students tend to be sympathetic to the country where they once studied, and they normally keep some connections there.

North Korea has great potential, and when things start moving, those graduates are likely to be catapulted to high places, since people with modern education are so few in North Korea. This means countries that consider small investments in scholarships for North Koreans will eventually get large benefits through important connections and sympathies that their business people, engineers and scholars will find in some important offices of post-Kim North Korea.

Scholarships for North Korean students are not the only form of academic exchanges. North Korean scientists and scholars should be invited to Western universities, and books and digital materials should be donated to major North Korean libraries in large numbers. Of course, only selected people with special clearances are allowed to read non-technical Western publications in North Korea, but they are exactly the people who will matter when things start moving.

It is well known that students and academics who come back from longtime overseas trips are routinely submitted to rigorous ideological retraining upon their return to North Korea. But does it help? Unlikely. If anything, heavy doses of obviously nonsensical propaganda make a great contrast with what they have learned and seen, thus putting North Korean society in an even less favorable light.

Of course, they will not say anything improper when they come back home, but they will see that there are other ways of life, they will see how impoverished, bleak and hyper-controlled their lives are, and they will think how to change this. Sooner or later, these people will become a catalyst for transformation – and their skills will help to ease the pains of the post-Kim revival of North Korea.

Daily NK
Kwon Jeong Hyun
5/31/2007

In order to block the outflow of information, North Korean authorities have been conducting investigations and enforcing control over people who lead lifestyles that are better off than the average person.

An inside source living in the bodrder city of North Hamkyung informed on the 30th, “Since the end of April, special inspection groups began investigation to block the flow of out-sources.”

The source said, “An order was made to search people who recently visited family in China or illegal defectors who affiliated with South Korean or U.S. intelligence services are selling North Korea’s national information to foreigners for money.”

It appears that this order was made as North Korean authorities believe that citizens living along the border regions are receiving economic aid from defectors in South Korea or foreign organizations in return for information.

At a lecture last November that targeted border garrison, North Korean authorities stated, “Selling information is an act indifferent to selling the nation.”

One educational material criticized, “Being engrossed in making money is rooting out the secrets of authorities, the nation and military” and commented, “Recently, the enemy have been going to use extreme ways and measures to purchase the secrets of our authorities, nation and military with dirty money.”

The source said, “These inspection groups have offices in the People’s committee of each city and are in the process of inspecting the whole household” and relayed, “Every household will be inspected. Families with luxury daily goods and living standards exceeding their monthly income are being targeted for investigation.”

“The groups are inspecting each home for information regarding their workplace, monthly income and living expenditure by help of chairpersons of each People’s unit” said the source and explained, “Suspicious persons are taken away to the secret groups for further cross-examination.”

As a result, families are running around moving their electrical appliances and household items to other homes temporarily. The source informed, “What’s worse, even law officers (including inspectors, National Security Agents, Safety Agents) are frantically hiding their electric rice cookers, gastops and color TV’s.”

“Since 2004 unto now, these groups have also been searching for missing persons, people without secure residences and the unemployed” added the source.

Hankyoreh
Authored by Ryu Yi-geun and translated by Daniel Rakove

PYONYANG: “Next time, please come back and purchase something,” implored Mr. Hong to the customers leaving his store empty-handed.

“You’re saying you earn more if you sell more?”

“You bet.”

But this reporter was still suspicious. Four days later, I carefully asked our handler for confirmation.

“Of course it’s true,” he assured me. “Even in the same eight-hour workday, he who produces more results gets paid more.”

The concept of receiving compensation in proportion to the amount of sales is one that is now long familiar to North Koreans. Yet what is surprising is the gusto with which North Korean store staff will go to in encouraging South Korean tourists to buy their products, a phenomenon indicative of how great the materialistic impulse has become in the reclusive communist nation.

Constructed in Pyongyang’s central district in 1995, the 47-story Yanggak Hotel seems to float above the Daedong River like an island. Mr. Hong works at a store there on the second floor. There is even a spot next door to exchange money. Though the set prices are written on each product – in Euros – the South Korean customers managed to save a bit through bargaining. The owner was at first insistent that all products be only sold for the listed price, but he finally gave way after a long give and take with the customers. He decided it worthwhile to sell his products slightly cheaper, if only to make a profit. Though most transactions are conducted at the listed price, there were instances at the hotel store and other establishments of selling to tourists at a discounted rate after haggling over the price.

Elements of capitalism are slowly making their way into North Korean life – wrapped in the euphemism of “utility.” After returning from his trip to North Korea from May 14-18, on which he led 130 economic delegates, Min Byeong-seok, Director of the Hankyoreh Foundation for Reunification and Culture proclaimed, “I could unmistakably feel here and there that North Korea is changing.”

It is of course difficult to confirm the presence of change in North Korea. This is in part because the changes are occurring at a low level. After all, there is always a difference in what we look for compared to what we are shown. This is what makes it difficult for someone to declare unreservedly, “North Korea is this,” or “North Korea is that.” There are also parts of North Korea that are difficult to understand due to the biases originating from the political system and values of the observer. Hankyoreh21 managed to get a spot in the group of Pyongyang-bound economic delegates, and recorded below is a compilation of the various things we witnessed.

“My life has gotten so much better since last year.” These words did not seem to be mere propaganda. Whether spoken by our North Korean guide or the various Pyongyang citizens with whom we came in contact, their words were by and large the same. One citizen told us, “My wages increased from 3,000 to 6,000 North Korean won,” and consumer prices “went up about 10-20 percent.” In other words, wages have increased much faster than has the rate of inflation. Yet that man cannot be taken to be the representative Pyongyang laborer, nor does he have the credibility of an economist.

Indeed, it is hard to grasp the level of inflation in North Korea: all one can do is take an educated guess. Lee Do-hyang of the Institute for National Security Strategy said, “These things are evidence that the financial situation is improving and the economy is enduring,” adding, “It seems that the quality of life for common people is taking a turn for the better.” Yet in North Korea, where it is said some US$30 a month is necessary to get by, a 3,000 North Korean won raise is not exactly a windfall: 6,000 North Korean won is about equivalent to $2, and on the black market, $1 sells for 3,000 North Korean won. Thus, the rationing and side jobs that bring in an additional $15-20 a month are an essential source of income.

Pyongyang’s major marketplaces have grown livelier. Stretching between 2,000 and 3,000 pyeong (1 pyeong is 3.3 sq. meters), one large-scale market has taken up a spot next to Kimchaek Industrial School on a once-empty spot along Otangangan Street. In the shape of a high school gym, the market’s two-story building is covered in a blue roof and the exterior is clean. Visible from the Yanggak Hotel, the market was bustling at 6 p.m. on May 16. The Bonghak Market next to the Pyongyang Cosmetics Factory was also busy once the sun set. At least one marketplace has taken shape in each of Pyongyang’s 18 districts. Each one is a symbol of capitalism’s penetration of the socialist, planned economy. The activities in each market are said to be hardly distinguishable from the capitalism found in other countries.

One citizen said, “The people go to the markets more, where the prices are a little bit cheaper than at the nationally operated stores. Even if one doesn’t buy anything, it is fun to look around, what with the variety of goods for sale and the haggling going on.” Most citizens are said to buy their daily necessities at such markets, having become an essential part of daily North Korean life.

Street food vendors started appearing quite a while ago, but their numbers are ever-increasing. The fairly tidy vendors can be seen here and there throughout Pyongyang, selling a variety of goods, including soft drinks, ice cream, bread, rice cakes, and so on. Each product runs between 100-300 North Korean won.

The local People’s Committee gives licenses for the operation of such stands to various companies or the descendants of revolutionaries. A portion of sales is taken by the state and the remainder of the profit goes to the managing company or individual.

Though the residents of Nampo, a port city 40 minutes by bus from Pyongyang, do not seem to be better off than their Pyongyang counterparts, the city is quite lively. On the journey from the major ship repair factory by the port, through the city center, and to the freeway entrance leading to Pyongyang, 50-60 separate street food vendors were spotted. The products they were selling as well as their method of sale were quite diverse. Some vendors – most likely new ones – simply laid out their goods on the ground for sale, showing even to the outsider that North Korea’s markets have hit a growth surge.

Five years have passed since the July 1, 2002 economic measures were instituted by the North Korean government, raising wages as well as the currency’s value. In addition, the price of rice and other necessities was increased, and a system of incentives and limited independent capital was expanded. Yet very few North Korean people have even heard of “the 7/1 measures.” Only after talking for a significant length of time will they mention the notion of “utility” that has been pursued over the last few years.

At the end of Unification Road in the Nagnang district of southern Pyongyang, the Phoenix Clothing Factory is producing clothing on commission. The 1,000-pyeong factory is unceasingly filled with the whirr of sewing machines. U Beom-su, 53, introduced himself to the South Korean observers as the company’s “chief executive,” explaining, “The workers work eight hours a day, but when the fixed day for shipment draws near, we have no choice but to put them on overtime.” The payment system for workers is multi-tiered, with five levels, the salary increasing with rank. Every month, one laborer is chosen from each team of workers as being the most outstanding, and is given bonus compensation. The ‘chief executive’ explained that further incentive payments were rewarded based upon the factory’s production levels on the whole.

It is unclear as to how widespread this model of business is, but director of the Korea Institute for National Unification Lee Bong-jo said that “the seeds of competition are visible.” However, the workers at the Yuwon Shoe Factory and the Pyongyang Cosmetics Factory were flustered when asked about their salaries or the labor system and evaded giving an answer.

The will for liberalization was evident here and there. At the 10th annual Pyongyang Spring International Trade Fair on May 14, 200 companies from 12 countries participated, either to view the product lines or to display their own. The majority were Chinese companies, including its largest electronics firm, Haier, while there were several sections of the exhibition primarily interested in retailing to the foreign visitors themselves, the determination by North Korea to get its products out to foreign markets was apparent.

Many members from the South Korean team of economic representatives also participated. In particular, representatives from Daewoo Shipbuilding & Marine Engineering Co., Ltd, the world’s second largest shipbuilder, as well as the Korea Port Engineering Company, visited the Yeongnam Ship Repair Factory and the Nampo Port to explore the possibility of making investments in those places. In a gesture of consideration, the Northern handlers prepared a separate automobile for the potential investors to explore the grounds, and held a separate consultation session for them beyond the general one for the economic delegates. On multiple occasions, various North Korean officials expressed an interest in attracting South Korean capital. The self-confidence they showed hinted at a sense that they had to some extent resolved the immediate issues of day-to-day subsistence. It may sound strange, but the consensus of those who had also made the trip last year was that the electricity situation had improved. In other words, basic economic conditions seemed to be on the upswing. Perhaps the self-confidence North Koreans showed in displaying their possession of a nuclear weapon has now flowed into the economic sector, thus explaining their will for some liberalization.

Yet simply because there is a will for opening up does not mean liberalization will come easily. One Daewoo source explained, “[We told the North Koreans that] there must be assurances before we invest. They have to provide the same conditions that China does.” At this point, there is probably not a single person who could make such assurances on behalf of the North Koreans. The country is still unprepared to take advantage of the money available to it from the South through the economic cooperation program. The six-party talks also must also make some progress on the nuclear issue. Furthermore, if North Korean – U.S. relations do not improve, then free trade between North and South will remain uncertain indefinitely.

In the case that external matters are settled and the will for liberalization strengthens, then the vitalization of the North Korean economy could quickly pick up with the improvement of infrastructure, such as the electricity grid and logistics, which are pointed to as the largest stumbling blocks. The reporters who arrived first on May 12 witnessed, for instance, how the automatic doors and the elevator on the first floor of the Yanggak Hotel took 30 minutes to warm up. While the houses themselves gave off light after the sun set, the streets between them were completely dark. The mere 20-30 percent rate of operation at factories as estimated by experts is partially accountable to a lack of raw materials, but most of all to the deficiency of electricity.

The rigidity of the economic system only adds to North Korea’s list of woes. Though the director of Pyongyang Cosmetics has requested raw materials and modern machinery, he does not have the full authority to manage the company. Another company has imported the raw materials from China, and he confessed that he knew little of the specifics on the subject. The director of the Daeanchinseon Glass Factory made a similarly vague request for “raw materials.”

The problems go deeper. For one, there was no sign on the part of the North Korean factory managers to think of the visiting economic representatives as business counterparts in the world of capital and industry. For example, even photography by the group of South Korean trade representatives was forbidden within the factory grounds. Another chronic problem is the ease by which North Koreans that are not economic officials or specialists break promises. Furthermore, as often appears in planned economies, there is a single-minded focus on “production” without consideration of whether the product being made is for domestic use or for export. This sort of difficulty was evident at the cosmetics and shoe factories, as well.

Lee Bong-jo, director of the Korea Institute for National Unification, offered some advice to the South: “Knowledge of North Korea must precede any investments there.”

It seems that amongst difficulty, Pyongyang may be carefully seeking change. Though it remains stuck in the dilemma of pursuing liberalization while maintaining regime stability, it is increasingly sending strong signs to the outside world of a will for liberalization. As South Korean Former Minister of Unification Jeong Sye-hyeon said, “It is difficult for North Korea to go backwards.”

Korea Herald
Kim Yoon-mi
5/30/2007

Hyundai Asan, the South Korean operator of travel to Mount Geumgang in North Korea, is considering expanding its new program that would allow South Koreans to tour the inner side of the mountain, its CEO Yoon Man-joon said yesterday.

Hyundai Asan on Sunday and Monday ran two pilot tours to inner Mount Geumgang, which has been closed by North Korea despite the South Korean company’s eight-year-long request to open it to South Korean visitors.

The new tour course will be open to the general public from June 1.

“For now, the new course is open three times a week, on Tuesday, Thursday and Saturday. But depending on the tourists’ response, we could increase the visiting days. And this has already been agreed to with North Korean officials,” Yoon said during a press meeting at Pyohun Temple at inner Mount Geumgang on Monday.

Hyundai Asan’s tourism business met difficulties when North Korea conducted a nuclear test in October last year. With tension heightened on the Korean Peninsula, the number of tourists visiting Mount Geumgang plummeted, ruining Hyundai Asan’s target of securing 400,000 visitors a year. The number reached only 240,000 last year.

“We set the target at 400,000 again this year. About 15 to 20 percent of the tourists are expected to visit inner Geumgang this year. I hope by launching the inner Mount Geumgang tour, it give us a second leap toward successful Mount Geumgang tour business,” Yoon said.

The new tour includes a bus ride through North Korean villages for an hour and a half.

During the bus ride, North Korea people’s livelihoods, commercial buildings and schools will be visible to South Korean tourists.

“It must have been a big decision for North Korea to open up their ‘inner bedroom’ because you would do so to only those who are really close to you,” he said.

Regarding new marketing strategy for the existing tour to the outer side of Mount Geumgang, Yoon said the company will revamp tour programs to attract younger visitors.

Also, Hyundai Asan will add two tour sites called Munpil Peak and Beobgi Rock to the outer Mount Geumgang tour course as early as in June, he said.

The inner Mount Geumgang tour, once opened in June, will be operated from April to November with a price tag of 420,000 won ($450) for a three-day tour per person. The outer Geumgang tour currently costs 390,000 won per person.

“Just as inner and outer parts of Mount Geumgang meet to become one, I hope one day the two Koreas can become one,” said Hyundai Group chairwoman Hyun Jeong-eun, who also participated in the pilot tour on Monday.

Daily NK
Han Young Jin
5/30/2007

The rice-planting season began at the beginning of May. Consequently, city and provincial safety agencies have adjusted market hours at Jangmadang (markets) affecting the lives of North Korean people greatly, a source informed on the 30th. Even street vendors have been completely prohibited from selling goods on the side alleys of Jangmadang.

Ever since the rice-planting season began, the markets open at 5 o’clock in the afternoon until sunset. Basically, sellers can only trade for 3 hours at the most.

Park(43) who lives in the border regions of North Hamkyung province said, “We live by selling at Jangmadang. I feel like cast a spiders’ web in my throat because the authority forced to close Jangmadang during the farm supporting activity. Leaders of the People’s Units force members to work on the farms and the Safety Agents scowl Jangmadang like an eagle scavenging for food.”

She should support her husband working at a factory which manufactures farming equipment and two sons. Surviving the march of suffering, she began to sell noodles at the markets.

Park said, “If I sell things, at the least, I can make a little money and buy some corn. If I cannot trade for a month, I will have lost all my goods to waste.”

Every year, North Korea endures the rice-planting season and closes Jangmadang partially. Although many people buy rice and corn in advance, it is nonetheless a tough month for the people and acquiring food is a big concern.

“They said they would redistribute rations from April. Lately, they haven’t said anything but to be patient” said Park and added, “Since we cannot afford to have rice, I only hope that the price of corn does not increase.”

Rice which sold at 850 won in early May has already risen more 50 won. Fortunately, corn has maintained its cost at 300 won.

In North Korea, spring poverty season from early March is called as “Yellow Spring,” because the sky is seen yellow for the malnutrition or hunger. The period between end-May to mid-June is the time of “farm hardship (‘barely hump’ in Korean)” Around June 15th, when barley begins to ripen, the “farm hardship” disappears.

Normally as March approaches, people begin to deplete their stored a year worth of food. By May, the 6 months worth of Kimchi that was made in last December has been consumed and people resort to herbs and plants to accompany their meals.

More recently, as trade became common, there have been less cases where people have died from starvation.

It is even uncommon for Park’s husband who works for an agricultural factory to acquire distributions from his work. He is offered lunch when he gets called to fix equipment on the farms but then again, this doesn’t happen every day.

Hyun who trades between Pyongan and Hwanghae said dissatisfied, “They (authorities) said they would distribute rations as of April 1st. The people are angry as they feel they have been deceived once again. It is common practice that rice is lacking during the springtime, but I don’t understand why they keep attracting the people’s discontent by telling lies.”

He said, “People living in Pyongan are in a worse position than people living in the border regions. Traffic control officers roam the district of Moonduk, South Pyongan and regulate merchants by forcing them to the farms.”

Hyun added, “In the past, even amidst starvation, people in Pyongan believed that they were living in such deity because the U.S. ruined the economy. When I went there this time, the atmosphere was certainly different. People are blatantly cursing that the ‘nation cannot even feed and save the people.'”

So, it looks like Hummel, a Danish sports apparel company is sponsoring the North Korean national soccer team.

http://www.hummel.dk/Company/Sponsorships/Football/North%20Korea.aspx

AFP (Hat Tip DPRK Studies)
Simon Martin
5/23/2007

The managers of this capitalist enclave in communist North Korea are appealing for the world’s support, saying their experiment in free markets can pave the way for regional peace.

Diplomats who toured the Kaesong Industrial Complex Tuesday were urged to set aside worries over the North’s nuclear programme and to invest in the complex adjacent to the world’s last and heavily fortified Cold War frontier.

“I know you are concerned about the political situation on the peninsula but I strongly believe inter-Korean projects can help reduce tension,” Kim Chul-Soon told lunch guests of diplomats and reporters who toasted the project with North Korean “Wild Flower” wine to the strains of Mozart.

Kim is executive vice-president of Hyundai Asan, the South Korean firm which since 1998 has invested 1.2 billion dollars in Kaesong and in the North Korean tourist resort of Mount Kumgang on the east coast.

Work began at Kaesong in 2005 and the complex now has 22 factories with five more under construction. The workforce totals some 12,100 North Koreans, including construction workers, and 700 from the South.

Ambitious plans, strongly backed by the South Korean government, call for some 2,000 companies employing 350,000 people by 2020.

A management committee of the two sides touts Kaesong as “the hope for the future” of the two Koreas, which had almost no economic exchanges until a groundbreaking summit in 2000.

Committee chairman Kim Dong-Kun noted that Kaesong was one of the battlegrounds of the 1950-53 war which cemented the peninsula’s division.

“I am confident it will pave the way for peace and stability in the Korean peninsula and Northeast Asia but I realise this will only be through strong international support,” he told diplomats.

Visitors to Kaesong are greeted by a portrait of North Korea’s “Great Leader” Kim Il-Sung, who died in 1994, as they pass through the heavily fortified frontier zone.

But the fenced-off complex, funded almost entirely by the South, is otherwise a propaganda-free zone. North Korean officials refer to “South Korea” rather than the “south side,” as official media terms its neighbouring nation.

Pictures of North Korea’s Kim dynasty are not in evidence, apart from on lapel badges, and presentations praise the private sector.

Managers say they want to emulate Shenzhen, the special economic zone bordering Hong Kong which kick-started China’s economic boom. But unlike in Shenzhen, North Korean workers — described as diligent, well-educated and eager to learn — cannot spend their wages as they wish.

Companies pay the basic wage, 57 dollars and 50 cents a month for a 48-hour working week, to North Korean officials.

The officials, on average, return 15-20 percent to the worker in North Korean won and the remainder in the form of food and other essentials.

Given the North’s crumbling command economy and persistent food shortages, jobs at Kaesong are still apparently desirable.

“Because North and South Korea are working together, it feels great because unification will come sooner,” said one female worker at the ShinWon textile factory in a typical response.

Asked how much she earns, she told AFP through an interpreter that “we earn enough to make a living and keep our stomachs full.”

Kaesong’s supporters say it will narrow the huge economic gap between North and South but they seek foreign support. Apart from one Japan-invested joint venture, all factories at present are owned by South Korean companies which enjoy tax breaks to invest.

Six sites have been set aside for overseas firms in the first phase.

Goods are labelled “Made in Korea” and are covered by Seoul’s free trade deals with Southeast Asia. But the United States, which sealed an FTA with South Korea recently, agreed only to consider the Kaesong issue later.

The aim is also to revitalise South Korea’s small- and medium-size firms, especially textile companies which are struggling against competition from cheaper Chinese labour. Textiles account for almost half of Kaesong’s total production worth 115 million dollars since it opened.

Joong Ang Daily
5/22/2007

President Roh Moo-hyun said yesterday that his government will accelerate investment in North Korea’s Kaesong industrial park, regarding it as part of South Korea’s “unification expenses.”

“My government has not sped up the pace of its investment in the Kaesong industrial complex due to political risks. I now regret that,” the president said in an interview with the Maeil Economic Daily and its cable news affiliate MBN.

“Uncertainties surrounding investment in Kaesong will prove to be far less than expected, as the North Korean nuclear problem is certain to be settled through dialogue and confidence-building measures. Economic benefits from the Kaesong project are immeasurable.”

The president stressed that smooth operations of the industrial park will help South Korea’s external economic credibility and small businesses struggling with rising labor costs.

“The most important factor [involving Kaesong] is unification expenses. One of the surest ways to reduce the expense of unification is to make the Kaesong project successful. We have to expand our investment in Kaesong as soon as the North Korean nuclear problem is settled,” said Roh.

The industrial park is one of two flagship projects South Korea operates to promote reconciliation with North Korea, along with tours of the North’s scenic Mount Kumgang. Over 13,000 North Korean workers are now employed in Kaesong by 23 South Korean firms.

But opposition parties and other conservatives in the South are accusing the Roh government of having blindly offered excessive aid to the Kaesong complex and other inter-Korean cooperation projects.

Roh also reiterated his determination to pursue an FTA with China.

“A free trade deal with China is inevitable. But we’ll conclude it after completing the restructuring of our agricultural sector through the FTA with the U.S.”

Commenting on South Korea’s economic growth potential, Roh said the nation’s economic growth rate will soon rise again to the 7 percent level from under 5 percent due to positive effects from FTA deals and massive planned investments in the construction of new administrative, business and public corporation towns across the nation, which are estimated to reach 54 trillion won by 2010.