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Kaesong Visit Possible Without Invitation

Sunday, March 25th, 2007

Korea Times
Kim Sue-young
3/25/2007

South Koreans will now be more easily able to visit the Kaesong area in North Korea as an invitation from the North is not required, officials of the Unification Ministry said.

For visit to the joint inter-Korean industrial complex in the city, the North Korean association on economic cooperation used to issue an invitation but an admission ticket from the Kaesong Industrial District Management Committee (KIDMC) is now sufficient, they said.

“Recently, North Korean authorities which manage the complex and the committee agreed to abolish the invitation system during a discussion over rules on entry and stay,’’ an official said on condition of anonymity. “Instead, visitors should get a pass from the committee and long-term visitors who will stay for more than seven days should register at North Korea’s immigration office.’’

The two Koreas are talking over details to simplify the entry but have difficulties narrowing differences on the amount of charges that visitors should pay for the pass and registration, he said.

Officers of South Korean companies in the area, however, expressed worries over North Korea’s possible demand for expensive fees.

“Under the previous rules, visitors had to pay some amount of money when they obtained documents for stays, extended expiration dates or changed their addresses,’’ another official said asking to remain anonymous.

“Companies in the complex, however, may face problems doing business in the complex if the burden from those fees are heavier than the convenience brought by dropping the invitation system.’’

As for the worries from resident companies in Kaesong, the ministry official said, “It is unavoidable to impose some amount of money for guaranteeing a person’s identity.’’

Both sides are still discussing reasonable charges, he added.

Meanwhile, the North is pushing to establish a special economic zone on two islets located near the border of China. The zone is aimed at gaining China’s investment and reviving the declining economy, another source said.

Pyongyang is seeking to create a free trade zone on the Bidan and Wihwa islands on the Yalu River bordering China and has sounded out South Korean companies on their investment plans for the project, the source said.

The economic zone would specialize in areas such as trade, distribution, light industries and tourism, it added.

Posted in Kaesong Industrial Complex (KIC), Tourism | Comments Closed

S. Korea to prepare for 2nd-stage development of N.K. industrial complex

Sunday, March 25th, 2007

Yonhap
3/25/2007

South Korea will begin preparations for the development of a 2.5-million-pyeong area in the inter-Korean industrial complex in Kaesong, North Korea in the second half of this year, the Unification Ministry said Sunday. One pyeong equals 3.3 square meters.

The government will measure and conduct a geological survey of the land in the western North Korean border town for the second-stage construction of the industrial complex, the ministry said.

The construction project aims to build a 20-million-pyeong industrial base in three stages for South Korean companies by 2012. The complex, if completed, is expected to employ as many as half a million North Koreans to work for about 2,000-3,000 South Korean manufacturers.

The government originally planned to embark on the second-stage project last year, but had to put it off amid inter-Korean tension caused by the North’s missile and nuclear tests.

The ministry also said it plans to parcel out a 530,000-pyeong lot for South Korean manufacturers late next month. The land is the remainder of the 1-million-pyeong lot the South and North Korean governments have been jointly developing in the industrial complex.

The Kaesong industrial complex is one of the two major cross-border projects that South Korea has kept afloat in spite of U.S. opposition. The two Koreas also run a joint tourism project at the North’s scenic Mount Geumgang.

In the industrial complex, South Korean businesses use cheap but skilled North Korean labor to produce goods. Currently, 21 labor-intensive South Korean factories employ about 11,160 North Korean workers.

But U.S. hard-liners criticize the complex, claiming that the factories where North Korean workers earn about US$60 a month are actually channels to funnel much-needed hard currency to the tyrannical North Korean regime.

Posted in Economic reform, Foreign direct investment, Kaesong Industrial Complex (KIC), Manufacturing | Comments Closed

North Demands Fees for Workers in Kaesong

Monday, March 19th, 2007

Korea Times
Lee Jin-woo
3/19/2007

North Korea has demanded that South Korean visitors or residents at a joint inter-Korean industrial complex in Kaesong, just north of the Demilitarized Zone (DMZ), pay registration fees, the Ministry of Unification said Monday.

The ministry, however, withheld the exact amount of money that Pyongyang demanded.

“I want you to understand it as a visa fee. It’s natural for one country to ask visitors from another nation to pay a certain amount in registration fees,’’ Unification Minister Lee Jae-joung told reporters.

Another ranking official also declined to reveal the amount of money proposed by the North, only saying there is a certain gap between the two sides.

Under an agreement on the operation of the Kaesong site signed in December 2003, South Korea is supposed to pay fees in accordance with the period of residence.

It defines a short-term stay as within 90 days and a long-term stay as more than 90 days. A South Korean who stays in the complex for over a year is defined as a resident.

South Koreans, however, have not paid any registration fees to the North Korean authorities because there has been no detailed regulation since the agreement was signed.

Currently, about 800 South Korean residents live at the complex, where South Korean businesses use cheap North Korean labor to produce goods. Some 21 South Korean factories employ about 11,160 North Korean workers there.

Meanwhile, Minister Lee marks his 100th day in office today. He took office on Dec. 11 last year despite vehement opposition from the main opposition Grand National Party (GNP).

After more than a seven-month chill, inter-Korean relations have been restored recently with several talks between the two Koreas underway to improve the reconciliatory atmosphere on the Korean Peninsula.

Asked to choose the most satisfying moment he had in the past 100 days, Lee picked the 20th inter-Korean Cabinet meeting held earlier this month in Pyongyang.

During the four-day ministerial talks which ended March 2, the two Koreas agreed on several principles including the resumption of family reunions using video links from March 27 to 29.

In inter-Korean Red Cross talks, the two sides recently agreed to resume construction of the reunion center beginning March 21.

Posted in Economic reform, Kaesong Industrial Complex (KIC), Labor conditions/wages, Special Economic Zones (Established before 2013) | Comments Closed

Plans to Employ 3,000 Pyongyang Workers At Gaesung Industrial Complex

Monday, March 12th, 2007

Daily NK
Kim Song A
3/12/2007

Inter-Korean Economic Cooperation “Motive on driving a stable complex”

A claim has been made suggesting that North Korea will reallocate 3,000 workers from Pyongyang to Kaesung Industrial Complex.

Representative Kim Kyu Chul of the Citizen’s Solidarity for Inter-Korean Economic Cooperation revealed on the 11th, “North Korea’s Guidance Bureau for Developing Central Special Economic Zone informed the plan to the South Korean government and enterprisers who are moving in the zone and asked them to provide employees with accommodation.”

Representative Kim informed “In the past, the North has employed workers from other regions to maintain stable human resources… For the first time, workers from Pyongyang will be employed at Kaesung Industrial Complex. These people will be amongst the 18,000 skilled workers already working at Kaesung.”

Furthermore, Representative Kim disclosed his opinion, “The motive behind the North’s recent plan is its determination to establish a more stable Kaesung Industrial Complex and to minimize insecure business aspects related to human resources.”

In response, a South Korean governmental official said “The issue of worker’s accommodation has been a case continuously faced by the North” and added “We cannot know the North’s specific intentional plan for human resources but we will keep in contact to discuss these practical affairs.”

Presently, 11,740 North Korean and 689 South Korean full-time employees are working at Kaesung Industrial Complex. In the case a 3,305km square of factories site on the first phrase is completed as scheduled for this year, then 300 or so companies will be able to lease the area. Consequently, the number of North Korean workers needed at Kaesung Complex will exceed 80,000.

In addition to this, the Korea Industrial Complex Corporation announced that apartments approx. 22.5km square would be on the market until the 14th, for 40 or so companies interested in the factory complex. The Korea Land Corporation will also begin inspections next month in order to find a location for a 1,752km square factory site.

Posted in Bureau of Special Zone Development, Kaesong Industrial Complex (KIC), Labor conditions/wages, Political economy, Special Economic Zones (Established before 2013) | Comments Closed

Outlook for Inter-Korean Business Bright

Wednesday, March 7th, 2007

Korea Times
Park Hyong-ki
3/7/2007

The outlook for inter-Korean trade this year seems bright, as North Korea agreed to dismantle its nuclear weapons programs at the six-party talks in Beijing last month.

According to a survey conducted by the Korea International Trade Association (KITA), about 45 percent of South Korean companies doing business with North Korea were optimistic that the volume of inter-Korean trade will grow this year. The survey was conducted on 150 firms in February.

Some 35 percent believe that the bilateral trade will remain the same as last year’s, while only 15 percent showed negative responses toward this year’s trade, saying that the volume will “drastically” decrease.

Only two companies said they will pull out of North Korea this year, while five companies were undecided.

Last year, inter-Korean trade amounted to about $1.3 billion, up 28 percent from 2005. Key trading commodities were agricultural, chemical and textile products.

Despite North Korea’s nuclear and missile tests as well as chilly inter-Korean relations last year, South Korean companies operating in the Kaesong Industrial Complex saw their sales grow 69 percent to $298 million.

The Kaesong site is one of the major cross-border projects symbolizing economic ties between the two Koreas, which utilize North Korea’s cheap labor and South Korea’s technological skills.

The Ministry of Unification is hoping to attract about 2,000 manufacturers to Kaesong by 2012. Currently, there are 55 South Korean firms operating in the joint economic zone, which account for 22 percent of overall South-North business, according to the trade association.

The other joint business _ the Mt. Kumgang tour managed by Hyundai Asan _ suffered from the aftermath of North Korea’s nuclear weapon test. The tourism project recorded only $57 million in sales, down 35 percent from the year before.

Specifically, a total of 477 South Korean companies participated in inter-Korean trade last year, down from 523 firms in 2005, due to heightened risks following Pyongyang’s nuclear test.

About 44 percent of those surveyed said that the test had negatively affected their business with the North. The report showed that only 39 percent reaped a “little” profit last year while doing business with North Korea.

Half of firms upbeat for North trade
Joong Ang Daily
3/8/2007

Almost half of South Korean companies doing business with North Korea said they have a bright outlook for inter-Korean trade this year due to expectations for better ties with the North, a poll said yesterday.

According to a survey of 67 companies conducted by the Korea International Trade Association, 45 percent of the respondents said inter-Korean trade will likely increase this year. Thirty-five percent expected trade to remain at the same level as last year while 15 percent said it will likely decline.

The poll also said 75 percent of local companies operating in the industrial park in the North’s border city of Kaesong had an optimistic outlook for trade. The industrial complex, mainly for smaller South Korean firms, is considered a model for reconciliation and cooperation between the two Koreas. Currently, 21 garment and other labor-intensive South Korean plants are operating there, employing about 11,000 low-paid North Korean workers.

The survey said among the firms that forecast inter-Korean trade to rise, 17 percent said their continued trust in North Korean firms was the reason for their upbeat outlook, while 16 percent and 14 percent said it was a rise in new orders and expectations for inter-Korean reconciliation. The survey was conducted before a deal on dismantling North Korea’s nuclear program was reached, reflecting that local firms have maintained a positive view toward inter-Korean trade. The agreement calls for Pyongyang to shut down and disable its main nuclear reactor and dismantle its atomic weapons program.

Posted in Foreign direct investment, International trade, Kaesong Industrial Complex (KIC), Korea International Trade Association (KITA), Mt. Kumgang Tourist Special Zone, South Korea, Trade Statistics | Comments Closed

The Political Economy of Sanctions Against North Korea

Sunday, March 4th, 2007

Ruediger Frank
Asian Perspective, Vol. 30, No.3, 2006 pp. 536

PDF Here: DPRK sanctions.pdf

Abstract:
This article explores sanctions as a policy tool to coerce North Korea’s behavior, such as by discontinuing its nuclear weapons program. It discusses the characteristics of sanctions as well as the practical experience with these restrictions on North Korea. It becomes clear that the concrete goals of coercion through sanctions and the relative power of the sending country to a large extent determine the outcome. Nevertheless, the general limitations of sanctions also apply, including the detrimental effects of unilateral and prolonged restrictions. It appears that the imposition of sanctions against the DPRK is unlikely to succeed. As an alternative way of changing the operating environment for North Korea, assistance deserves consideration. Despite many weaknesses, this instrument is relatively low in cost and risk, and can be applied continuously and flexibly.

Highlights below the fold:
(more…)

Posted in 2002 Economic reforms, Black markets, Economic reform, Foreign direct investment, International Aid, International trade, Japan, Kaesong Industrial Complex (KIC), Political economy, Rason Economic and Trade Zone (Rajin-Sonbong), USA | 1 Comment »

Golf Courses Due in Kaesong

Monday, February 26th, 2007

Korea Times
Kim Yon-se
2/26/2007

Hyundai Asan is considering building three golf courses in Kaesong, North Korea, by 2012 as its first round of development projects at the Kaesong Industrial Complex have almost been completed.

According to sources, the inter-Korean tourism operator of Hyundai Group is in talks with the North to build an 18-hole golf course in the North Korean city by 2010 and two more by 2012.

A Hyundai Group official said the proposed golf course would be the second of its kind. One golf course has already been developed near Mount Kumgang and is scheduled to open to South Korean tourists later this year.

In a statement, however, Hyundai Asan predicted that it will take some time before the plan is realized as the North’s stance has yet to decided.

The company said talks between the two countries for the second development project would be possible after the first project is completed.

North Korea has stirred controversy by negotiating with a small South Korean company, Unico, to build a golf course despite its initial contract with Hyundai Asan to develop golf courses around the Kaesong Industrial Complex.

Since last July, the North has banned South Korean visitors to the industrial complex from visiting the city’s downtown area including historic sites.

Hundreds of South Koreans, mostly businesspeople and government officials, had been allowed to make an excursion to the city of Kaesong during their visit to the industrial complex.

Hyundai had signed a memorandum of understanding (MOU) with Emerson Pacific Group, which has been constructing golf courses at the scenic resort area at Mount Kumgang, for the project in Kaesong.

Posted in Emerson Pacific Group, Golf, Kaesong Industrial Complex (KIC), Sports, Tourism | 1 Comment »

Key facts on relations between North and South Korea

Monday, February 26th, 2007

Reuters (Hat tip DPRK studies)
2/26/2007

Senior officials from South and North Korea resume talks on Tuesday, seven months after dialogue broke down in acrimony over Pyongyang’s missile tests.

Following are key points in the ties between the two:

STILL AT WAR

– An armistice ending the 1950-53 Korean War dominates the relationship between the two Koreas. Nearly 1.2 million North Korean soldiers and South Korea’s 680,000 troops remain in a tense military standoff despite political and commercial ties that have warmed since 2000.

– The two have enough missiles and artillery pointed at each other to largely destroy major cities on both sides of the Korean peninsula.

POINTS OF EXCHANGE

– An industrial park in Kaesong just a few minutes’ drive from the heavily-fortified border is home to 21 companies employing about 12,000 North Korean workers.

– About 1.4 million South Koreans have visited the Mount Kumgang resort in the North just above the border on the east since the tours began in 1998. Roughly a quarter of a million made the visit in 2006 even as tension spiked following the North’s missile and nuclear tests.

– About 102,000 people crossed the border last year, not including Kumgang tourists and most of them South Koreans visiting the North for business. The total exchange of people was 269,336 as of the end of 2006.

TRADE

– Cross-border trade was $1.35 billion in 2006 up from $1.05 billion a year ago, largely from the strength of the Kaesong industrial park.

HUMANITARIAN AID

– South Korea has supplied between 200,000-350,000 tonnes of fertiliser a year to the North since 2000.

– It has also shipped up to 500,000 tonnes of rice a year to the North in the form of low-interest, long-term loans. Food aid has been suspended since the North’s missile tests in last July.

REFUGEES, PRISONERS OF WAR AND ABDUCTEES

– South Korea believes more than 1,000 of its people are still alive in the North either as civilian abductees or as prisoners captured during the Korean War.

– North Korea has said 10 South Korean POWs and 11 civilians were alive there.

– More than 1,000 North Koreans each year have fled hunger and persecution in the North and sought refuge in the South. In the first six months of last year, 854 arrived in the South for a total of 8,541. (Source: South Korean Unification Ministry, Kaesong Industrial District Management Committee, Reuters)

Posted in Economic reform, Emigration, Emigration statistics, Foreign aid statistics, Foreign direct investment, International Aid, International trade, Kaesong Industrial Complex (KIC), Military, Mt. Kumgang Tourist Special Zone, South Korea, Special Economic Zones (Established before 2013), Statistics, Tourism, Trade Statistics | Comments Closed

Wage payment to N. Korean workers in Kaesong complex surges 48% since missile tests

Sunday, February 25th, 2007

Yonhap
2/25/2007

Wages paid for North Korean labor in an industrial complex in the North’s western border town of Kaesong surged nearly 50 percent in the second half of last year, despite the communist country’s missile and nuclear tests, government data showed Sunday.

According to a report submitted by the Unification Ministry to the National Assembly, North Korean employees’ wages in the Kaesong industrial complex amounted to US$4.23 million in the second half of last year, up 48 percent from the first half’s $2.87 million.

“Even after the North’s missile tests and nuclear test (in October), the hard currency, which the international community takes issue with, continues to end up in the hands of the communist regime while the payment for the Kaesong workers also is expanding,” said Chin Young, a lawmaker of the main opposition Grand National Party, who released the report.

The Kaesong industrial complex is one of two major cross-border projects along with a joint tourism project at the North’s scenic Mount Geumgang.

In the joint industrial complex, South Korean businesses use cheap North Korean labor to produce goods. More than 20 South Korean factories employ a total of 11,189 North Korean workers in Kaesong.

The North, meanwhile, conducted missile tests in July and its first nuclear test in October in defiance of opposition from the international community.

Those incidents prompted a setback in inter-Korean relations and raised concerns that the money paid to the North in the industrial park could be funneled to the communist regime, an allegation that Pyongyang denied.

The report showed wages paid to the North Korean workers have been on the increase in the past few years. In 2004, they stood at $390,000 but rose to $2.76 million in 2005 and $7.10 million in 2006.

Posted in Economic reform, Kaesong Industrial Complex (KIC), Labor conditions/wages, Special Economic Zones (Established before 2013) | Comments Closed

Perry Praises Kaesong Complex

Thursday, February 22nd, 2007

Korea Times
2/22/2007

Former U.S. Secretary of Defense William James Perry on Thursday called an inter-Korean industrial complex in Kaesong, North Korea, as the “future of the Korean Peninsula.’’

He made the remarks after a half-day visit to the joint venture.

Perry described the Kaesong complex as a very positive and impressive project to promote peace and prosperity on the Korean Peninsula, an official of the Ministry of Unification who accompanied Perry on the visit, said.

He also praised North Korean officials, calling them “frontiersmen,’’ the official said.

He led a five-member delegation including Stephen Warren Bosworth, former U.S. ambassador to Seoul, Kim Jeong-hun, a Korean-American businessman, and Ashton Baldwin Carter, a professor at Harvard University.

The American delegation was briefed by Kim Dong-keun, the president of the complex’s management committee, and it looked around two factories, including that of clothing manufacturer ShinWon.

During their four-day visit to Seoul, which ended Thursday, they met with Minister of Foreign Affairs and Trade Song Min-soon and leading presidential hopefuls including former Seoul Mayor Lee Myung-bak. The presidential poll is slated for Dec. 19.

The South Korean government plans to resume the expansion of the Kaesong site no later than mid-April.

Last Tuesday, the ministry said it plans to parcel out a 530,000-pyong lot for South Korean manufacturers. One pyong equals 3.3 square meters.

The land is the remainder of a lot of 1 million pyong that the two Koreas have been jointly developing since the first phase of the inter-Korean project. Under the project, a 20 million-pyong industrial base will be built for South Korean companies by 2012.

When fully expanded by 2012, the complex is expected to house about 2,000 South Korean manufacturers employing about half a million North Koreans, according to the ministry.

The industrial complex is one of two major cross-border projects South Korea has kept afloat despite the chilly inter-Korean relations. The two Koreas are also running a joint tourism project at Mount Kumgang in the communist North.

Posted in Economic reform, Foreign direct investment, Kaesong Industrial Complex (KIC), Special Economic Zones (Established before 2013) | Comments Closed

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