Archive for the ‘International trade’ Category

Plastic Surgery Popular, Breast Augmentations a Trend

Tuesday, June 12th, 2007

Daily NK
Kim Young Jin
6/12/2007

Recently, it has been reported that businesses in charge of facial plastic surgery and skin maintenance are becoming more popular among the wealthy class.

Through a survey DailyNK conducted on actual living conditions in the Northeast region of North Korea, it was discovered that massage rooms, steam baths, beauty-related enterprises (plastic surgery and skincare maintenance) are the main thriving businesses.

Beauty-related businesses such as these prevail in relatively large-sized cities, such as Chongjin in North Hamkyung, Hamheung in South Hamkyung, and Wonsan in Kangwon. This trend seems to follow the up and coming wealthy class who have risen through doing business in North Korea.

Skin maintenance and plastic surgery which has caused a stir among the women in Shinuiju and Pyongyang have spread to inland countrysides within the last several years.

Double eye-lid surgery, eyebrow tattoos, and others can be simply performed by a plastic surgeon doctor or beauty operation specialists, so it has been widely popular among young women.

The cost of plastic surgery, in the case of double eye-lid surgery, was 500 North Korean won per one-eye in 2004, but the asking price has been 1,500 won since 2006. The North Korean exchange rate was recently 2,980 won per dollar.

In addition to double eye-lid surgery, breast augmentation has been spreading to a portion of upper-class women. The popularity of the breast enlargement surgeries demonstrates an encouragement of beauty among North Korean upper-class women.

◆ “Massages” a rage, centered on large-scale cities = Chinese-style health massages cost around 10,000 (US$3.4) North Korean won per hour and for an additional 2~30,000 won, on-the-spot sex with a female masseuse is possible.

This survey, based on the latter half of May, took place by focusing on the price of commodities in five cities, such as Kim Chaek and Chongjin City in North Hamkyung, Danchun and Hamheung in South Hamkyung, and Wonsan Kangwon.

The results of the survey showed that the region with the highest standard of living in the Northeast region is Wonsan City of Kangwon. The reason why Wonsan has a relatively high standard of living is that it has been a central place of trade with Japan.

If North Korea and China’s trade can be represented by Shinuiju, then Wonsan has played that role with trade with Japan. However, it has recently been severely targeted by the suspension in North Korea and Japan’s trade.

Wonsan’s upper-class restaurants are known to show aggressive service by shouting “Welcome” when guests come in, by decorating the interior of restaurants, and by adopting a Chinese-style waiter and waitress system.

In addition, Japanese secondhand goods have been highly traded in Wonsan. Electronic rice cookers, sewing machine, fans, TVs and other Japanese thrift goods are commonly traded and have more reasonable prices than the other regions.

Newly released 2-3 person electronic rice cookers are around 13~150,000 won, fans around 7~80,000 won, used gas stoves around 15~200,000 (approx. US$50.34~67.10), used TVs around 20~250,000 won, and flat-screen TVs over 350,000 (approx. US$117.50) won.

The supply of electricity is not an issue, so it is provided 24 hours long and electricity is better-supplied than in Hamheung.

Further, the “105 factory (furniture production factory)” in Wonsan produces furniture which is delivered to the Central Party and the quality, compared with the cost, is supposed to be the best in North Korea.

Industrial goods in Chungjin are relatively economical, but Chinese-made color TVs and flat-screen newly-released TVs are sold for 20~250,000 and 350,000 won, respectively. Used bicycles imported from Japan is sold for 10~150,000 won.

In Chongjin, the number of taxis have risen lately, but because of the expensive cost, not too many people take advantage of it. Going 4km costs around 5,000 won. Taxis that are operating are either Chinese used taxis or imported cars which are past the expiration date.

◆ The price of rice narrowly rises = In Hamheung, the cost of taxis is supposed to be slightly higher than Chongjin. There are not too many people who ride taxis, so the rate is doubled beyond the center of cities and in remote places.

The cost of penicillin has risen significantly in Chongjin, with the spread of the measles, the scarlet fever, and other infectious diseases since last winter. Chinese penicillin is hard to acquire due to its reputation for having poor quality and North Korean penicillin is sold at Jangmadang (market) for 500 won per one.

The cities considered to have low standards of living are Kim Chaek of North Hamkyung and Danchun in South Hamkyung. The size of the jangmadang (market) is smaller than in other regions and there is a limit in the variety of goods. Steam baths or massage places do not even exist. The price of medical goods are also supposed to be exorbitant.

The specialty of Kim Chaek City is its low cost of nails. The Sungjin Steel Works Complex in Kim Chaek produces nail by melting steel and sells them, which is sold for 2,200 won~2,500 won per kg in Hoiryeong, at 1,200 won in Kim Chaek. However, not only is the weight heavy and is difficult to package, but the usage by civilians is not very high, so the incidence of sale to other provinces is low.

In Danchun, the price of fruit is very expensive, so it is not sold by the kilogram unit, but is sold individually. One medium-size apple is sold for up to 800 won.

On one hand, the price of rice in North Korea’s northeast region showed a narrow upward tendency in the latter half of May at the end of the spring shortage season. Corn, the staple of low-income civilians, did not show a huge change.

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25 pct of Kaesong-made goods exported this year, ministry says

Sunday, June 10th, 2007

Yonhap
6/10/2007

Products made in an inter-Korean industrial park in the first four months of the year were valued at US$48.1 million, about 24 percent of which, or $11.3 million worth of products, were exported, South Korea’s unification ministry said Sunday.

Last year’s comparable figure during the cited period was 18.4 percent, or $2.3 million, according to the ministry.

The industrial complex, located in the North Korean border city of Kaesong, is one of two flagship projects the South operates with the North in the spirit of reconciliation that developed following the historic inter-Korean summit in 2000.

Over 13,000 North Korean workers are currently employed by 22 South Korean companies there. They produce garments, utensils and other labor-intensive goods.

The biggest importer of Kaesong-made goods was the European Union (EU), followed by China, Russia and Australia.

The ministry did not give figures on how many goods made in the industrial park the countries imported.

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U.S. Alleges North Korea Is Misusing Aid for Poor

Saturday, June 9th, 2007

Washington Post
Glenn Kessler and Colum Lynch
6/9/2007

Probe Says U.N. Money Was Spent on Property Overseas

About $3 million in United Nations money intended to help impoverished North Koreans was diverted by the Pyongyang government toward the purchase of property in France, the United Kingdom and Canada, according to a confidential State Department account of witness reports and internal business records. Millions more, the department reported, went to a North Korean institution linked to a bank alleged to handle arms deals.

The U.N. Development Program (UNDP) in North Korea spent about $3 million a year over the past decade to promote the country’s economic growth, foreign trade and investment. It halted operations in March after the United States alleged that the agency engaged in improper hiring and financial practices. A preliminary U.N. audit, released last week, confirmed that it violated its own guidelines by hiring local workers who were selected by the North Korean government and paying them in foreign currency.

A separate State Department investigation suggests that some of the agency’s money enriched the North Korean government. The U.S. ambassador to the United Nations, Zalmay Khalilzad, presented UNDP Administrator Kemal Dervis with new allegations regarding the North Korea programs Wednesday, a UNDP spokesman confirmed.

“At first glance, the allegations do not correspond with our own records, which we have scrutinized extremely closely in the past six months,” spokesman David Morrison said.

The U.S. probe, headed by Mark Wallace, a deputy ambassador, also found that the UNDP procured for North Korea equipment that could be used in a weapons program. Such “dual use” equipment included global-positioning system equipment, computers and computer accessories, and a device known as a mass spectrometer, used to determine the isotopic composition of elements.

Morrison said the UNDP purchased the computers, GPS equipment and spectrometer to enable the forecasting of weather patterns in flood- and drought-prone areas of the country. He noted that the 10 GPS devices cost $65,000 and the mass spectrometer cost $6,000.

“UNDP takes these allegations very seriously and has asked the U.S. Mission to provide all available documentation to substantiate the allegations and to facilitate UNDP’s own immediate review of them,” Morrison said.

Ric Grenell, a spokesman for the U.S. Mission to the United Nations, said the information presented to Dervis “indicates an apparent misuse and diversion of UNDP funds, business dealings with certain suspect entities affiliated with [North Korea], UNDP’s procurement of potential dual-use equipment and information related to the further use of counterfeit U.S. currency in” North Korea. He said Dervis indicated that he is “committed to investigating the matter” and providing answers.

The State Department has not made public any documents to back up its interpretation, and Khalilzad has declined to release details of the department’s investigation. Some congressional staff members have received confidential briefings on the findings.

The revelations come at a sensitive moment, as the Bush administration has been working closely with other countries, particularly Russia, to arrange a transfer of $24 million in tainted North Korean money to facilitate an agreement to shut down North Korea’s nuclear reactor.

The U.S. probe discovered that the UNDP purchased for the North Korean government 29 books for an arms control and disarmament project, including one titled “The Psychology of Nuclear Proliferation.” Morrison said the books were purchased in December and delivered last month. “In hindsight, better judgment could have been used in the selection and delivery of these books,” he said.

The State Department and the UNDP are in sharp dispute over some of the figures in the transactions. Such quarrels have been frequent between State and the UNDP, with tempers subsiding when documentation emerges to challenge the rhetoric.

According to the State Department, the UNDP transferred more than $7 million between 2001 and 2005 to a North Korean government entity, the National Coordination Committee for UNDP. Morrison said the figure is much lower — a few hundred thousand.

During 2001 and 2002, the UNDP also transferred more than $8 million of other agencies’ funds to the North Korean government, the State Department said. Pyongyang then transferred at least $2.8 million of the UNDP funds to North Korean diplomatic missions in Europe and New York to “cover buildings and houses,” including purchasing buildings in France, the United Kingdom and Canada, the probe found.

The UNDP said the national government received $2.2 million. The agency has no means to determine how North Korea financed its purchase of expensive houses, Morrison said, but he said the UNDP has verified that its money was used to fund its programs.

The State Department also alleged that the UNDP paid nearly $2.7 million for “goods and equipment” to a North Korean financial institution that is linked to Tanchon Commercial Bank (also known as Changgwang Credit Bank). President Bush designated that institution in 2005 as the main North Korean financial agent for sales of ballistic missiles and parts used in the assembly of weapons and missiles.

A UNDP official said the State Department has cited to the agency two financial institutions linked to Tanchon — Zang Lok and the International Financial and Trade Company. The U.N. audit found one payment, for $22,000, sent via Zang Lok in 2004 and none for International Finance.

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North Korea needs a dose of soft power

Wednesday, June 6th, 2007

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.

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Despite Nuclear Tests North Korea-China Trade Continues to Rise

Tuesday, June 5th, 2007

Daily NK
Kim Yong Hun
6/5/2007

table 5.jpg

Despite the nuclear test last October, trade between North Korea and China has increased steadily. Rather, signs of North Korea’s economic dependence on China is becoming more obvious.

According to statistics recently released by the Ministry of Unification, “2007 1st Quarter, North Korea’s trade status with China,” trade between the two countries recorded $330mn, a 13.8% increase compared to 2006. While North Korea exported $130mn worth of commodities, an increase of 45% compared to the previous year, imports equaled a total of $200mn, a small decrease of 2.4%.

Last year, trade between both North Korea and China totaled $1,699.6mn recording the highest amount of trade ever in history and even this figure had risen 7.5% compared to the year before.

Analysts argue that North Korea’s economic dependence on China is increasing as a result of sanctions implemented by the international community and delay of the February 13 Agreement.

Even until last year, the trade deficit had increased to $764.17mn, an increase of 29.9% compared to 2005. However, in the first quarter of 2007, the trade deficit seems to have taken a major plummet of 61.3% down to $74mn.

North Korea’s main trade commodities are fuel based including coal and minerals, accounting for $45mn (49% increase to 2006) of exports to China, and 34.7% of total exports. In detail, $33mn of minerals, $12mn of medicine, $7.7mn of steel and $6.2mn of fisheries are exported also.

On the other hand, goods imported into North Korea are again fuel based including petroleum and crude oil and account for $31mn (42.5% decrease to 2006) of imports. Further, machinery equates to $17mn of imports, electric appliances $16mn and filaments $11mn.

In the report, the Ministry of Unification indicated North Korea’s major export to China as coal and minerals and analyzed, “This is the result of China’s increased demands for economic growth.”

The Ministry reported, “The majority of imported goods are energy, electric appliances and machinery” and added, “Demand for these light industry goods have increased from an expansion in North Korea’s consumer market. Imports have risen as a result of materials necessary for industrialization.”

According to a report recently released by the U.S. Congressional Research Service (CRS) “North Korea’s Economy,” the amount of trade that occurred between the U.S. and North Korea barely reached $3,000 in 2006, the lowest figure ever recorded since 1990. The only items exported to North Korea were books and newspapers and no imports were received by the U.S, revealed the CRS.

Furthermore, 2006 recorded an all time low of $130mn trade between Japan and North Korea, undoubtedly a reflection of Japan’s strong implementation of economic sanctions on North Korea. Since 1995, Japan has been supporting North Korea with a total of 1.2mn tons of food aid but suspended the aid relief in late 2004 following the issue of Japanese abductees.

Russia’s exports of minerals and coal to North Korea surged dramatically in 2003 and in 2006, total trade with North Korea recorded $220mn. Hence, Russia became now one of the big three trading partners of North Korea with China, South Korea, the CRS reported.

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Russia Belatedly Joins in Sanctions against N.Korea

Friday, June 1st, 2007

Chosun Ilbo
6/1/2007

According to Russia’s Itar Tass news agency on Wednesday, Russian President Vladimir Putin has signed a decree imposing sanctions on North Korea in compliance with a UN Security Council resolution in the wake of Pyongyang’s nuclear test last October.

The presidential decree applies a full weapons embargo against North Korea in pursuance of UN Security Council Resolution 1718. All Russian government agencies and enterprises will be banned from exporting to North Korea tanks, fighter jets, warships, heavy artillery pieces, missiles, and missile launchers, as well as materials that can be used for nuclear weapons development.

In addition, North Korean officials involved in development programs for weapons of mass destruction including nuclear weapons are banned from entering Russia. Shipments of luxury goods to North Korea are also banned.

The measure will likely have no tangible effects, however, given that the current annual trade volume between Russia and North Korea is only about $200 million.

The decree comes as North Korea continues to delay implementing the conditions of the Feb. 13 nuclear disarmament agreement. The decree may put pressure on North Korea to follow the agreement.

After the UN approved the sanctions against North Korea in October last year, Russian government agencies had consultations amongst themselves and coordinated with the Russian parliament. Putin finally signed the sanctions decree on Sunday.

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NKorea’s capitalist enclave seeks foreign support

Wednesday, May 23rd, 2007

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.

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FACTBOX: South Korea’s industrial park in the North

Tuesday, May 22nd, 2007

Reuters (Hat tip to DPRK Studies)
5/22/2007

The park is located in the North Korean border city of Kaesong about 70 km (45 miles) – (Reuters) – The Kaesong industrial complex in North Korea is set to grow by leaps and bounds in the next few years despite political problems in the wake of the communist state’s nuclear test last year, a South Korean executive said.

Here are some key facts about the Kaesong Industrial District:

LOGISTICS

The park is located in the North Korean border city of Kaesong about 70 km (45 miles) northwest of Seoul. A brand new highway runs through the Demilitarized Zone border taking workers from the South and finished products from the North.

Kaesong is the first cooperative manufacturing venture where South Korean firms use North Korean labour. It is run by Hyundai Asan, part of the Hyundai group, along with Korea Land Corp.

EMPLOYMENT

As of May 21, more than 14,000 North Koreans were employed at 23 South Korean factories producing items such as textiles, watches and cosmetic cases.

The minimum monthly wage is $50 for each employee as well as $7.50 for social insurance. The wages are paid to the North Korean state and not directly to workers.

CHARGES OF EXPLOITATION

In May 2006 Jay Lefkowitz, the top U.S. official for human rights in North Korea, raised concerns about possible worker exploitation at the complex. Lefkowitz said the well-intentioned project may simply end up providing funds that prop up the North Korean regime. South Korea rejects the criticism as biased.

DUTY-FREE EXPORT?

South Korea and the United States agreed to set up a joint committee to study allowing Kaesong products duty-free status in the U.S. market under a free trade deal struck in April. South Korea says future projects in the North will be entitled to the same privilege. Washington is less enthusiastic.

FUTURE PLANS

South Korea’s vision for the Kaesong project, which began in June 2003 with first batch of goods shipped to South Korea in 2004, includes more than half a million North Koreans employed by 2,000 firms and with hotels, golf courses and a “peace park”.

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Due to China’s protest, North Korea’s drug production facility partly closed

Monday, May 21st, 2007

Daily NK
Han Young Jin
5/21/2007

Well-informed sources say Heungnam manufacturer’s production facility shuts down.

Several well-known sources relayed on the 20th that as North Korean drugs flow into China in large amounts, it strongly protested to North Korea and requested that the Heungnam Pharmaceutical Manufacturer in Hamheung be shut down.

Following suit, the North Korean government authorities was known to destroy the Heungnam Pharmaceutical Manufacturer used in producing bingdu (the alias for “ice” classified in the category of Philopon in North Korea).

The well-informed source said, “China’s judicial authorities are strongly coping with the situation by imposing three years of penal servitude to those who sell 10g of Bingdu (so called “Ice” in North Korea) or a penalty of 20,000 yuan. When North Korea demonstrated a lax response, China expressed strong discontent.”

In North Korea, the Nanam Pharmaceutical Manufacturer in Chungjin, North Hamkyung is famous as a representative drug manufacturing company. The source evaluated that Hamheung, which has recently risen as a drug production base, had weak means of living which produced the highest number of deaths during the 90s’ mass starvation and the stimulant “Ice” was misused due to the lack of medical products.

$3,000 per kilogram…dealt for $10,000 at the border

An internal source said, “During the March of Suffering, a part of citizens who even sold raw materials and factory equipment earned big money by selling drugs. Since then, everyone has followed the trend. The people in Hamheung started handling drugs with great ambition due to the fact that at the Heungnam Pharmaceutical Manufacturer, the prime cost for a kilogram is $3,000 dollars and the profit exceeds $5,000.”

The source said, “In the past, people touched drugs hoping to make a big fortune with a single swoop, but everyone is thinking about making money by selling drugs nowadays. Inevitably, the number of civilians who have become ‘ice’ addicts has significantly increased.”

Ice can be produced for $3,000 per kilogram and sold on site for $7-8,000 and at the border region where smuggling is possible, it can be sold for up to $10,000.

Another source said, “Civilians have fallen to the bedazzlement of making a jackpot with drugs, so they have gone to the border region carrying drugs and seeking dealers. However, fakes that have been manufactured ingeniously are also making a wave.”

In North Korea, as drug sales have been unyielding, it was known that teenagers who are touching “ice” are not only seriously in Hamheung but in all regions. They are not showing immediate signs of addiction, but they can be presumed as “high-risk” people for addiction.

North Korean businessman Mr. Kim, who is engaging is trade between North Korea and China, wore a sorry expression and said, “Nowadays, children who are not yet fully grown use ‘ice.’ Not too long ago, my friend’s 12-year old son was found while secretly using his father’s ‘ice.’ After severely beating him, the father asked, “Do you like ‘ice’ so much? The son responded, ‘it is a cure-all.’”

In the mid-1990s, due to deteriorated medical facilities and a shortage of medical goods, citizens started to depend on folk remedies. Civilians who started using ‘ice’ in lieu of cold medicines started using it as emergency medicine even for the flu and strokes.

Mr. Kim said, “Ice has a stimulant quality, so it is used to as a stimulant and a stress-releaser. Even children have come to regard it as a panacea and think that a little suck of ice will instantly get rid of pain and make one refreshed.”

Narcotic squads hardly have any strength

The North Korean authorities issued a narcotics degree in March of last year to prevent drug abuse. It has even issued the threat of putting to death related parties of drug deals. However, businesses that have earned money through drugs feed bribes to inspection organs, so sources said that these institutions cannot exert any strength.

One domestic source said, “Recently, a Central Party inspection group was organized in Shinuiju and came forward to regulate drugs, but authorities such as the National Security Agency, the National Security Office, and others have become implicated. However, exposing them in increasing measures makes punishment difficult, because complicit individuals can come forward in hordes.”

Drug sellers in the border region have divided left-over profits from handing over to China with participating National Security officers. The source said, “If a drug dealer is arrested, if back-money is given, even the ring-leader will be immediately released.”

The source also said that upper-class drug inspection groups can instantly become conspirators due to the high amount of money to be handed over to their superiors.

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N.Korean ship sails in South waters

Sunday, May 20th, 2007

China Daily
5/20/2007

A North Korean cargo ship arrived in South Korean waters for the first time in more than 50 years on Sunday, as commercial shipping services began to open up between the divided countries, officials said.

The 1,850-ton Kang Song Ho with a crew of 27 anchored near the southeastern port of Busan early Sunday for inspections by South Korean maritime authorities, said Kim Na-young, a coast guard official.

Kim said the ship – the first North Korean cargo vessel to arrive in South Korea for commercial business since the 1950-53 Korean War – would dock at Busan port on Monday.

The North Korean ship will “carry cargoes between Busan and the North’s northeastern port of Rajin three times a month,” said Lee Won-jae, an official for Kukbo Express Co., a South Korean agent for the North’s cargo ship.

The ship was expected to depart Busan as early as Monday after loading 60 empty containers, said Lee.

Officials handling the issue at South Korea’s Unification Ministry were not immediately available for comment.

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An affiliate of 38 North