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Over 4,000 North korean workers in Kuwait

Sunday, October 14th, 2012

According to Yonnhap:

Some 4,000 North Koreans are estimated to be working at major construction sites in a suburb of the Kuwaiti capital and living in military-style camps run by the North’s government, a Seoul diplomat said Monday.

Impoverished North Korea has recruited its people to work abroad and reportedly kept most of their earnings, one of the few sources of hard currency for the isolated regime. Along with China and Russia, the Middle East is a major destination for North Korean laborers.

“We have figured out that there are around 4,000 North Koreans working at major construction sites to build homes, hospitals and other facilities in a suburb area of Kuwait City, including Jahar,” the diplomat said on the condition of anonymity.

A North Korean worker in Kuwait earns up to US$500 per month, but nearly four-fifths of the worker’s monthly salary is directly deposited into accounts controlled by the North’s government, according to the diplomat.

“A North Korean worker is believed to actually receive $100 per month, with their jobs ranging from plasterers, carpenters, welders to drivers at the construction sites,” the diplomat said.

In April this year, eight North Korean workers were arrested by Kuwaiti authorities for allegedly bootlegging alcoholic beverages, the diplomat said. Alcohol is illegal in Kuwait, making the illicit business of alcohol bootlegging highly profitable.

Additional information:

1. The North Korean company involved might very well be the Korea General Corporation for External Construction (GENCO). Learn more about GENCO here.

2. The Kuwaitis have funded some development projects in the DPRK.

3. Air Koryo has reportedly flown to Kuwait.

4. Michael Madden notes that the DPRK’s ambassador to Kuwait is Ho Jong, who served for many years at the New York (UN) embassy.

Read the full story here:
About 4,000 N. Koreans work at construction sites in Kuwait: diplomat
Yonhap
Kim Deok-hyun
2012-10-15

Posted in Construction, International trade | Comments Closed

DPRK and the ivory trade

Sunday, October 14th, 2012

As is well known, North Korean embassies self-finance their operational revenue and salaries. They also remit funds back to Pyongyang. As far as I am aware, the DPRK may have the only foreign service that is not a drain on the treasury.

Many times, however, the operations in which DPRK officials get involved take palce in the gray and black markets. I have previously posted about this here, here, here, here, here, here.

This weekend, news surfaced that a North Korean was involved in trading elephant ivory in Africa. According to AllAfrica.com:

The Mozambican customs service on Thursday seized 130 items of carved ivory, valued at about 36,000 US dollars, that a North Korean citizen named Jong Guk Kim was attempting to smuggle out of the country.

According to a press release from the Mozambican tax authority (AT), Jong was returning to Korea, via South Africa, and had already checked in for his flight, when customs officers intercepted him in the departure lounge of Maputo International Airport, and demanded that he open his hand baggage.

The ivory was hidden in several plastic bags. The 130 carved pieces weighed about three kilos.

Ivory can only be exported with the authorisation of the Ministry of Agriculture – if, as seems more than likely, Jong Kim has no such authorisation, the ivory will be confiscated and revert in favour of the state.

The Korean was also carrying 133,300 US dollars in banknotes in his hand baggage. Under current Mozambican exchange regulations, the maximum that anyone can take out of the country without declaring it is 10,000 dollars.

Anything above this sum must be authorised by the Bank of Mozambique.

Jong Guk Kim must now explain how he obtained this money. If he can prove that it came from a legitimate source, he will be allowed to export it – but only through normal banking channels.

The AT also revealed that it had recently seized in Maputo, seven rhinoceros horns, and about a tonne of abalone. Abalone is a genus of marine mollusks, threatened with extinction, due partly to overfishing, and partly to acidification of the oceans arising from climate change.

The abalones seized in Maputo probably came from South Africa. Abalones occur along much of the South African coast, and the South African authorities require permits for any export of this shellfish.

A tonne of abalone is valued at about five million dollars. It is believed that the ultimate destination of the Maputo abalone was Hong Kong.

I tried to locate the press release by the Mozambique Tax Authority but was unsuccessful.

Read the full story here:
Mozambique: North Korean Caught Smuggling Ivory
AllAfrica.com
2012-10-12

Posted in Illicit activities, International trade, South Africa | Comments Closed

North Korea-China economic, trade, culture, and tourism expo to be held

Tuesday, October 9th, 2012

Institute for Far Eastern Studies (IFES)
2012-10-4

North Korea-China Economic, Trade, Cultural, and Trade Expo is scheduled to be held from October 12 to 16, 2012 at Dandong City, Liaoning Province. The expo will be jointly hosted by the China Council for the Promotion of International Trade, Liaoning Provincial Committee, Liaoning People’s Friendship Association, and Dandong Municipal People’s Government.

China accounts for 90 percent of North Korea’s foreign trade. Approximately 70 percent of this trade comes through Dandong. Currently, Dandong is gaining both domestic and international attention as the construction of the New Yalu River Bridge is nearing completion and progress on the Hwanggumpyong and Wihwa Islands Special Economic Zone is advancing.

North Korea-China Economic, Trade, Cultural, and Trade Expo will provide a place for not only product exhibits but will provide consultation for economic and trade cooperation, cultural exchanges and tourism. From the North Korean side, the largest trade investment company and government agency in charge of overseas labor export will be in attendance.

Over 500 booths and sections are ready for the expo and over 5,000 participants from foreign buyers are expected to attend. Over 100 companies and a 300-member economic-and-trade delegation will be coming from North Korea.

North Korea has recently held briefing sessions in Beijing for North Korean SEZs in Rajin and Hwangumpyong and Wihwa Islands from September 26 to 27. This two-day event was organized by the North Korean Committee for the Promotion of Economic Cooperation and China’s private GBD Public Diplomacy and Culture Exchange Center.

This event was an exclusive, invitation-only event, inviting major Chinese companies with investment interest in North Korea. There were over 100 officials from 30 different state-run corporations from North Korea present at the session to provide detailed information about 50 investment projects. The participants were required to pay an entrance fee and news media were prohibited from the event.

China’s Overseas Investment Federation (COIF) and North Korea Investment Office (NKIO) signed an agreementon September 22 to jointly launch the “Special Fund for Investment in North Korea.” NKIO is an overseas investment body subordinate to the Joint Venture and Investment Committee of North Korea (JVIC).

According to a Chinese media source, both states have set 3 billion RMB (476 million USD) as the goal for the fund; but in the initial stage, 1 billion RMB (159 million USD) will be utilized first to develop urgently needed urban infrastructure facilities focusing on mining, real estate, and port industries.

Posted in China, Institute for Far Eastern Studies, International trade | Comments Closed

DPRK china trade triples in five years

Monday, October 8th, 2012

According to Yonhap (via Korea Herald):

North Korea’s trade with China nearly tripled over the past five years, South Korean government data showed Sunday, underscoring the isolated North’s growing economic reliance on its major ally.

Trade between North Korea and China stood at US$5.63 billion last year, up 284 percent from $1.98 billion in 2007, Seoul’s unification ministry said in a report to the National Assembly.

North Korea’s exports to China almost quadrupled to $2.46 billion in 2011, compared with $580 million in 2007, the data showed. Imports rose to $3.17 billion last year, from $1.39 billion in 2007.

The North’s main export items were coal and iron ore, while primary imports from China were crude oil, gasoline and cargo trucks, it said.

A separate story on the report which also appeared in the Korea Herald featured these additional stats:

China accounted for only 67 percent of the North’s total trading with foreign countries, also including Russia, Thailand and Japan in 2007. But the dependency rate grew to 72.9 percent in 2008 and 82.9 percent in 2010 before hitting 89.1 percent last year, the report showed.

…

Annual food imports from China stood at 155,000 tons in 2008 and they have steadily grown to reach 380,000 tons for the whole of 2011, it said.

The same story had data on wages in the Kaesong Industrial Zone:

Another ministry audit report also showed that since 2004, South Korea has so far paid a total of $245.7 million in salary to North Korean laborers working in the Kaesong Industrial Complex, a joint inter-Korean industrial project in the North Korean village of Kaesong.

…

The report showed that a North Korean worker in the industrial zone earns an average $128.3 every month as of the first half of this year.

The average monthly pay stood at $68.1 in 2006 before steadily growing to $109.3 for last year.

Read the full story here:
N. Korea’s trade with China nearly tripled over past 5 years
Yonhap (via Korea Herald)
2012-10-7

N. Korea’s trade with China surges due to U.N. sanctions
Korea Herald
2012-10-8

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

South Korean lawmaker claims DPRK luxury good imports increasing

Thursday, October 4th, 2012

According to the Donga Ilbo:

Saenuri Party lawmaker Yoon Sang-hyun, a member of the National Assembly`s foreign affairs, trade and unification committee, released Wednesday an analysis of closed trade data between North Korea and China, saying the North`s imports of luxury goods via Chinese customs reached 446.17 million U.S. dollars in 2010 and 584.82 million dollars last year. The figure was 272.14 million dollars in 2008 and 322.53 million dollars in 2009.

…

Imports were especially pronounced for high-end cars, TVs, computers, liquor and watches. Inbound shipments of luxury cars and associated components almost doubled to 231.93 million dollars last year from 115.05 million dollars in 2009. Ship exports increased more than 20 times from 17.48 million dollars from 840,000 dollars over the same period.

Artworks and antique imports reached 580,000 dollars last year, more than 10 times the figure of 50,000 dollars in 2009. Perfume, cosmetics and fur saw their inbound shipments double. Among items that saw sharp drops in imports were leather products and musical instruments.

In 2006, the United Nations banned member countries from exporting luxury goods to North Korea under U.N. Security Council Resolution 1718, entrusting them to decide on the items. South Korea also designated 13 luxury goods for the export ban in 2009. China has yet to designate its items, and North Korea is growing more dependent on imports from China.

The Daily NK also reported on the story.

Read the full story here:
N.Korea jacks up imports of luxury goods under new leader
Donga Ilbo
2012-10-4

Posted in International trade, Statistics, Trade Statistics | 1 Comment »

Some food, inflation, and trade data

Tuesday, October 2nd, 2012

These are all interesting data points. Do you think they offer reasonable journalistic evidence that the DPRK is practicing inflationary public finance?

First, Yonhap reports on DPRK food imports from China (2012-9-29):

North Korea’s grain imports from China slipped 16.3 percent on year in the first eight months of this year, in an apparent sign that the North may diversify its supply channels of grain, a Seoul researcher said Saturday.

North Korea imported 181,264 tons of rice, flour, corn and other grains from China in the eight-month period, compared with 216,535 tons for the same period last year, said Kwon Tae-jin of the state-run Korea Rural Economic Institute.

The decline in grain imports from China may be attributed to a rise in food aid from China and purchases from non-China markets such as Europe and South America, Kwon said.

“Including imports from non-China markets, North Korea’s total grain imports appeared to rise this year,” Kwon said in a report posted on his Web site, adding Pyongyang may “diversify its import channels.”

At the same time the Daily NK reports that food prices continue to rise (2012-10-2):

Internal sources informed Daily NK over the holiday that on September 29th the price of rice was 6,700 won/kg in Pyongyang, 7,000 won/kg in Onsung, North Hamkyung Province and 6,500 won/kg further west in Hyesan, Yangkang Province.

Not only do these prices far exceed those of Chuseok 2011, they even far exceed those of earlier this year.

The Hyesan source explained that on the day before the Chuseok holiday (Saturday) the atmosphere in the market was thus rather uncomfortable. “It was very slack,” she said. “People couldn’t buy anything easily, so most just seemed to be looking.”

Secondly, Yonhap reports that despite situations like those experienced by Xiyang or in Musan, mineral exports to China are up (2012-10-2):

North Korea’s exports of mineral resources recorded a 33-fold jump over the past decade with China remaining the biggest importer of the North’s iron ore and coal, a report showed Tuesday.

North Korea’s mineral exports stood at a meager US$50 million in 2001, accounting for 7.8 percent of its total exports, according to the report by Seoul’s Korea Trade and Investment Promotion Agency.

The mineral exports soared to $243 million in 2005 and $1.65 billion in 2011, accounting for 59.4 percent of the North’s total exports last year, the report said.

South Korea has estimated the total values of mineral deposits in North Korea at some $6.3 trillion.

Last year, North Korea exported $1.17 billion worth of anthracite coal and $405 million worth of iron ore, with China importing almost 100 percent of anthracite coal and iron ore, it said.

Posted in 2012 food shortage, Fiscal & monetary policy, Food, International trade, Mining/Minerals, Price liberalization, Statistics, Trade Statistics | Comments Closed

DPRK – Russia trade grows

Saturday, September 22nd, 2012

According to Yonhap:

Bilateral trade between North Korea and its ally Russia surged nearly 50 percent from a year earlier in the first half, a report said Saturday.

According to the report from Seoul’s state-run Korea Trade-Investment Promotion Agency (KOTRA), the amount of bilateral trade between the two countries in the January-June period came to US$38.8 million, up 49 percent from the same period last year.

The report, however, noted such a large on-year increase was due to a large drop posted in the first half of 2011.

“The volume of bilateral trade between North Korea and Russia is still insignificant by any standard,” it said.

The increase was also caused by a 68.3 percent rise in shipments of Russian goods to North Korea with fuel and steel products accounting for 29.9 percent and 28.7 percent of total shipments, respectively.

North Korea’s exports to Russia dropped 10.9 percent on-year to $5.4 million, according to the KOTRA report.

Here are some previous posts on this topic:
1. Lankov on DPRK-Russia trade (2012-9-18).
2. Russia reported to forgive DPRK debt (again)
3. KOTRA numbers from June
4. Lankov on DPRK-Russia ties (2011-9-25)

Read the full story here:
Trade between N. Korea, Russia surges 50 pct in H1
Yonhap
2012-9-22

Posted in International trade, Russia, Statistics, Trade Statistics | Comments Closed

Yanbian Haihua Group inks Chongjin port deal (and others)

Monday, September 17th, 2012

Pictured above (Google Earth): Chongjin’s two ports and shipyard

The PRC’s Global Times reports that in addition to use of the Rason Port, another Chinese SOE has taken out a lease/investment deal on the Chongjin Port. According to the article:

The official news website of the Yanbian Korean Autonomous Prefecture in Jilin Province reported on Thursday that the Yanbian Haihua Group inked a deal in Pyongyang on September 1 and established with its counterpart a $7.83 million joint venture company.

Under the deal, Haihua Group holds a 60.46 percent stake while the North Korean side owns the rest, to operate the Chongjin port’s No.3 and 4 wharves for 30 years.

The ports will be capable of processing 7 million tons of cargo a year and be put into use this year.

…

The prefecture’s public relations department and the Yanbian Haihua Group did not comment on the joint venture when contacted by the Global Times yesterday.

Although the Global Times reports a $7.83m price tag, the actual size of the deal appears much larger. According to the Donga Ilbo:

The North Korean regime has received 6.12 million euros ($7.82 million) of rental charges for the 3,180 square-meter (34,229 square-feet) piers and a 4,000 square-meter cargo yard from the Chinese company and paid the money to fund the newly-built joint venture, the newspaper said.

The Chinese company will invest a total of 13 billion won (USD $12m) on developing the port, such as building new equipment and facilities, which accounts for about 60 percent of the entire capital spent on the project.

According to the daily, they have already set up a series of detailed regulations on employment management, profit distribution and the formation of a new board with a goal to raise cargo traffic to one million tons by 2015.

The Yanbian group already spent 60 million yuan ($9.47 million) on manufacturing cranes and building necessary equipment, the newspaper said, and also completed work on stabilizing the 36,000-square meter grounds of the construction site.

They are scheduled to finish manufacturing cranes within the year to begin a full-fledged plan for domestic and international transportation through the port.

Yonhap and the Daily NK reported back in 2010 that this very same Chinese firm had leased the Chongjin Port for exports to South Korea and other parts of China:

The report, citing an anonymous government official from Tumen in China’s far northeast, across the Tumen River from Namyang in North Hamkyung Province, said that the usage rights have been sold to a “Chinese state company, Yanbian Haihua Import-Export Trade Company.”

He predicted, “Yanbian Haihua Import-Export Trade Company will start shipping between Chongjin port and Busan by container ship in September, and will start shipments to southern regions of China soon.”

The anonymous official also revealed that North Korea has agreed to allow the Chinese company to use the railroad between Tumen and Chongjin as part of the deal. The deal, the official said, will “facilitate trade from Tumen,” and added that the Chinese company which inked it is planning to use it to fulfill shipping contracts with three other Chinese companies.

The Chinese company is reportedly investing 10 million Yuan ($1.48 million approx.) in shipping cranes and other construction at Chongjin, and is having 150 freight cars produced to add to 50 already sent.

It would be interesting to know if the fiasco surrounding the Xiyang contract let to a renegotiation of terms of this deal in any way: Either by altering the ownership shares, time horizon, or if greater assurances against ex post expropriation were added. Since the contract is not ever likely to be made public, we may never know.

UPDATE 1 (2012-9-18): The Hankyoreh reports that quite a few ports on the DPRK’s eastern shore are being renovated by the Chinese. According to the article:

North Korea and China will develop 4 or 5 ports in the eastern coastal area of North Korea.
A source in Beijing said on Sept. 17 that it was confirmed through a Chinese government official that “4 to 5 ports in the eastern coastal area of North Korea in locations such as Seon-bong, Rajin, Cheong-jin, Gim-chaek, Dan-cheon, Heung-nam and Won-san are being jointly developed by North Korean and Chinese companies.” The source added that in addition to the two ports that are being developed in Rajin and Chongjin currently, businesses in the two countries are discussing specific conditions for development in the other areas. This is the first time that this information has been confirmed by a Chinese government official.

The Tanchon Port has been featured prominently in the DPRK media. Learn more about it here.

Posted in China, Foreign direct investment, International trade, Sea shipping, Transportation, Yanbian Haihua | Comments Closed

Chinese customs confiscate North Korean wildlife products

Monday, September 3rd, 2012

By Michael Rank

Pictured above: North Korean tiger bone wine in Rason tourist shop (Source here)

Chinese visitors to North Korea are increasingly bringing back endangered wildlife products, a Chinese website reports (http://www.#removed-for-malware-warning-external-site#idprkorea.com/news/news/view.asp?id=2446).

Between January and July this year Dandong customs have confiscated 137 bottles of tiger bone wine, five bears’ gall bladders weighing 172 grams and five boxes of powdered bears’ gall bladders weighing 50 grams.

It gave no further details but said such confiscations have increased with the growing numbers of Chinese tourists visiting North Korea. It noted that under China’s law on trade in endangered species traffickers can be fined or in more serious cases face criminal proceedings.

North Korea is known to have been involved in rhino horn smuggling in Africa and tiger bone wine is available in tourist shops in North Korea where it is popular with Chinese visitors on account of its alleged aphrodisiac properties. But it is not clear how much, if any, tiger bone the wine actually contains, or where it is derived from.

There is strong demand for bile from bears’ gall bladders throughout East Asia, with large numbers of bears being farmed for this purpose in China and South Korea, although the governments of both countries say the industry is coming under increasingly strict control. Little is known about bear farms in North Korea.

Posted in China, Environmental protection, Illicit activities, International trade, Tourism | Comments Closed

Bank of Korea publishes 2011 DPRK economic estimates

Monday, July 23rd, 2012

A couple of weeks ago, the South Korean Central Bank, the Bank of Korea, published its estimate of the size and composition of the North Korean economy in 2011. You can read the finings (PDF) here. I have posted this and many other estimates of the North Korean economy on my “DPRK economic statistics page“.

Here is coverage of the report in Bloomberg/Business Week:

Gross domestic product in the communist nation increased 0.8 percent in 2011 after a 0.5 percent decline in 2010, according to an estimate published by the Bank of Korea in Seoul. The nation’s economy has contracted during four of the last six years, the bank’s data show.

“The manufacturing sector declined, but the agricultural industry enjoyed better weather and more use of fertilizer,” the Bank of Korea said in an e-mailed statement.

North Korea is projected to keep growing under the new leader as its economic ties with China and Russia develop.

“Mineral exports to China and dollars brought in by North Korean workers sent to China and Russia would have driven the country’s GDP growth,” said Koh Yu Hwan, a professor of North Korean studies at Dongguk University in Seoul. “North Korea is expected to be economically stronger under Kim Jong Un as it continues to increase transactions with its allies.”

…

Kim Jong Un has waged a nationwide campaign to “bring about a turn in agriculture” and increase crop yields, according to a June 7 report carried by the official Korean Central News Agency. North Korea’s agriculture and fisheries sector expanded 5.3 percent in 2011 while manufacturing fell 3 percent, according to the BOK report.

North Korea’s nominal GDP totaled 32 trillion won ($28 billion) in 2011, compared with South Korea’s 1,237 trillion won, the BOK said. North Korea’s per capita income was 1.33 million won while South Korea’s was 25 million won, according to its estimates.

After adjusting for inflation, North Korea’s economy remained smaller at the end of 2011 than it had been in 2008, according to the Bank of Korea.

Here is more from Strategy Page:

The North Korean economy is undergoing changes. In fact, last year there was actually some growth, with GDP increasing .8 percent, versus a .5 percent decline in 2010. The North Korea GDP (about $28 billion, compared to $1,100 billion for South Korea). Thus even with a larger population, the average South Korean has 20 times more income as their northern counterparts. Moreover, income distribution is quite different in the north, where about two-thirds of the population is very poor and very hungry. The other third contains the well-fed ruling elite (whose lavish country estates can be seen via commercial satellite photos) and their supporters (secret police, military officers, bureaucrats) plus the semi-legal merchant class that has been allowed to develop over the last six years to avoid total economic collapse.
The economic decline in 2010, was the result of agricultural (floods) and industrial (massive power shortages) failure. But China came to the rescue by offering to set up mining operations in North Korea and buy billions of dollars-worth of minerals each year. China rebuilt railroads to handle the increased traffic from the remote North Korean mines. In addition, China offered legal jobs for North Koreans in China. The only catch was that the North Korean government took most of the pay. Similar deals have long been used with Russia but China offered far more jobs under more comfortable conditions. Competition for these jobs is fierce in North Korea and the government selects those deemed least likely to run away.

Last year North Korea bought more fertilizer for farmers and the weather was pretty good. That, plus the growing income from Chinese run mines and North Korean workers in China made up for the continuing declines in manufacturing. A good year on the farm is a big deal in North Korea, where farming and fishing are 23 percent of the economy (compared to under three percent in the south). But this year all of Korea is suffering from a record-breaking drought. This is hurting the north a lot more than the south. Although the monsoon (jangma) rains recenly arrived, a month late, the damage was already done in the north. Three months of very hot and very dry weather has seriously damaged crops. The rains will save some of them but at least a fifth of this year’s crops will be lost.

Posted in Agriculture, Agriculture statistics, Forestry, GDP statistics, International trade, Light Industry, Lumber, Manufacturing, Mining/Minerals, Statistics, Trade Statistics | Comments Closed

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