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North Korea’s transformation: A legal perspective

Thursday, February 12th, 2009

The Institute for Far Eastern Studies (IFES) published an interesting paper (with the above title) on legal reform in the DPRK. Below are some highlights. Links to the entire paper at the bottom.

As citizens have been left without state provisions for subsistence since the state did not have the material resources to supply the people through its central rationing system, the vast majority of individuals and organizations had to support themselves. Legitimizing commercial and market activity and expanding the scope of private ownership were a part of this effort. One of the most important laws reflecting this transformation is the Damage Compensation Law (sonhae bosang-beop), which is the North Korean version of a general torts law. This law holds an individual or any legal entity liable for its tort when damage is inflicted. Monetary compensation is the rule, while restoration is allowed when possible.

Under the socialist system, where the state is responsible for the provision of a citizen’s livelihood, tort law was of little use. Even in the case of death, one’s family would not suffer economically since the state provided sustenance rations. However, with the collapse of the public distribution system, the North Korean authorities could no longer maintain their socialist system. Since an individual now has to rely on his or her own devices, the loss of the employment, for example, directly inflicts a financial burden on the individual or family. Therefore, damage to property or person should be compensated for by the responsible party. Therefore, the new damage compensation law acts as a new mechanism for the protection of private property, and strengthens individual responsibility for negligent acts that inflict damage on others.

and…

Relaxation of law and order, along with the laxity of organizational control due to economic difficulties, changed individual attitudes toward government authorities and organizations in which these individuals were members. Individuals became more independent from the state and its organizations, since both the state and more directly engaged organizations lost important means of control over individuals in society due to the lack of resources and the inability to provide basic necessities to the people.

Under these circumstances, individual victims had no appropriate method to seek compensation for damage through an official dispute resolution process. This has led to an environment in which self-remedy has become the rule, rather than the exception. Although new criminal law punishes those who have used force in asserting their rights, there is no effective means of dispute resolution outside of taking advantage of officials willing to look the other way in exchange for favors, or hiring thugs to more directly resolve disagreements. Citizens can buy justice through bribes, and law enforcement officials are especially helpful in these endeavors when their palms are greased. This is much more economical as well as effective than bringing a case to the relevant official agency, which is generally incapable of resolving problems and instead further exploits the situation.

On courts and lawyers…

For example, the most prominent role of the court in North Korea, where other types of lawsuit are very unusual, was to handle divorce settlements, since divorce through simple agreement of the two parties was not allowed. Ordinary citizens went so far as to perceive settlement of divorce to be the most important role of the court. Criminal cases were also unusual. Political crime is handled through a non-judicial process, while many deviances are resolved through unofficial processes within more local organizations. The role of the court in resolving disputes was negligible, aside from divorce. Since the role of law enforcement agencies is to protect the state and secure the socialist system, the most important qualification for them is not legal expertise, but rather, loyalty and devotion to the North Korean ideology and system.

On the other hand, the Lawyer’s Act of 1993 prescribes the required qualifications of a lawyer. Those who are eligible to work as lawyers are those who are certified legal professionals, those who have working experience of no less than 5 years in legal affairs, or those who have a professional license in a certain area and have passed the bar examination after a short-term course in legal education. This qualification for working as a lawyer signifies that the state wants to equip the judicial system with legal professionals. Although there is no explicit professional qualification for a judge or prosecutor, we may assume that legal professionals have been elected or recruited in practice. This trend is likely to be reinforced as these social changes continue to unfold.

New provisions were also introduced to reinforce the judicial system. For example, interference with a law enforcement official’s performance of duties is now a punishable offence ; Threatening a witness or exacting revenge has been criminalized ; Non-execution of judgment will now be punished. Although the introduction of these provisions was an expression of the government’s effort to bring in a more effective judicial system, it would not be an easy task under the vague status of transformation. The state is very cautious and reluctant to undertake bold or fundamental changes due to concerns about political instability. Therefore, it takes time for various coherent mechanisms to fully support a market system.

You can download the entire paper in PDF format here.

You can read it on the IFES web page here.

Posted in 2002 Economic reforms, Automobiles, Aviation, Black markets, Damage Compensation Law, DPRK Policies, Economic reform, Finance, Foreign direct investment, General markets (FMR: Farmers Market), Institute for Far Eastern Studies, Insurance, International trade, Joint Ventures, Lawyers Act, Light Industry, Manufacturing, Price liberalization, Private property, Railways, Rason Economic and Trade Zone (Rajin-Sonbong), Real estate, Sea shipping, Special Economic Zones (Established before 2013), Transportation | 2 Comments »

Kim Jong il birthday gifts 2009

Wednesday, February 4th, 2009

UPDATE 2/20/2009): According to the Daily NK:

“Special holiday provisions,” which have long been provided to all the people of North Korea on the three major holidays, Lunar New Year’s Day, Kim Il Sung’s and Kim Jong Il’s birthdays, and provided a rare moment of modest luxury in the year, are becoming scarce and discriminatory in their application by the authorities.

A source from Yangkang Province reported in a telephone interview with Daily NK on the 17th, “There were no holiday provisions in Hyesan provided to the citizens.”

The source explained some of the causes, “In the past, the authorities prepared holiday provisions and handed them over in one lump to each city, county and province. But now, factories, working places or collective farms prepare provisions for associated workers and farmers by themselves. In this situation, cadres cast their obligation to prepare and distribute provisions onto lower managers and take their own portions first. Accordingly, many other citizens cannot have been given any provisions.”

The source from Yangkang Province continued that, “The holiday provisions had continued, even though they were nominal, until now. It was unimaginable that there could be no holiday provisions because even on October 10, 2005, the 60th anniversary of the founding of the Party, and on September 9 last year, on the 60th anniversary of the nation’s’ founding, there were special provisions of some sort.”

Historically, there have generally been three kinds of special provisions on national holidays. The first one is holiday gifts for children consisting of candies, cookies or school supplies; the second is more substantial foodstuffs like pork or liquor for everybody; and lastly the General’s special gifts for cadres and some workers or farmers who achieve impressive results.

“Get holiday provisions for yourselves!”

Until right before Kim Il Sung’s death, on the three holidays, these gifts and provisions could be taken for granted.

However, as the economic situation turned ugly, the special provisions from Pyongyang were all suspended. Since 1998, the holiday provisions have been given only to citizens of Pyongyang, aside from one kilogram of candies and cookies supplied to elementary school students.

Since 2000, the authorities have ordered other work places, factories and collective farms to provide holiday provisions by themselves from their own funds.

The order created side effects. Factories and other work places started mobilizing workers and residents to collect beans, medical herbs and bracken under the pretext of making foreign currency. They allotted certain duties to the People’s Units, factories and farms. For cadres, it appeared to be a significant business.

Regarding the Lunar New Year’s Holiday provisions for 2009, the North Korean authorities issued an instruction on December 20th entitled, “With respect to preparations for 2009 Lunar New Year’s Holiday provisions distinctively under the responsibility of the committee of each level of the Party.” It came from the Guidance Department of the Central Committee of the Party.

The source criticized that, “The cadres have used this occasion to generate benefits for themselves. Households where holiday provisions were given on Lunar New Year’s Day were just those of the “marvelous” cadres’ of the National Security Agency, the People’s Safety Agency, the Ministry of Foreign Trade and the Party.”

“On the 16th, local cadres of the Party were taken rice, pork, liquor, bean oil, and cigarettes as holiday provisions. Besides gifts to the Party in the provinces by each department, cadres of the Guidance Department under the Party in local provinces were given socks and cosmetic products produced in China,” the source reported.

He released rumors of this custom circulating among the people, “Some say that the Party in Poongseo, Yangkang Province exported 300 square meters of timber in early January [nominally in order to prepare for holiday provisions]. And, others say that deer and wild boar were offered to officials of local committees of the Party, the NSA and the PSA of the provinces.”

“When holidays come, only the people without power suffer to make foreign currency to guarantee cadres’ special provisions. Otherwise, they have to offer bribes in order to avoid doing such activities.”

Kim Jong Il’s special gifts flow into seats of power

A source from North Hamkyung Province revealed on the 17th, “For the February 16 holiday, the state supplied the authorities of Pyongyang, Hoiryeong, Samjiyeon and Kaesong Special District with provisions. In Hoiryeong, they received a bottle of bean oil, 500 grams of candies and cookies, soap, toothbrush and toothpaste.”

He additionally reported that, “In some regions of South Hwanghwa and North Pyongan Province, two or three-days of food were provided around February 16.”

The regions where the special provisions were supplied were all selected by the authorities; Hoiryeong, because it is the hometown of Kim Jong Il’s mother, Samjiyeon is the county where Kim Jong Il insists he was born, and Kaesong is a place opened to South Korea so it may have been for propaganda towards foreign visitors.

The source explained, “In 2006, in evaluation meetings for anti-socialism group inspections in Hoiryeong, chairpersons of the People’s Units brought to the attention of the inspectors the fact that many citizens had left their hometown, the Hometown of the Mother (Kim Jong Sook), for China due to the grim reality of their lives. After a petition was reported to the General, on every holiday special supplies have not failed there.”

However, he said, “Although technically I live within the Hoiryeong administrative district, those who live in rural districts, including me, were excluded from the special provisions.”

Meanwhile, Kim Jong Il’s gifts to the official class have not ceased.

“On the General’s birthday, Chief Sectaries of cities, counties and provinces of the Party and other high level cadres in local provinces receive the General’s gifts. Additionally, persons who provided distinguished service to the state or exemplary workers also got gifts, but in Hoiryeong merely seven workers and farmers received special gifts of any sort.”

He criticized, “In the past it was a pleasure that even liquor was provided equally to all the residents, but now it is in the past. Now, it is a happy day only for cadres.”

He expressed the atmosphere of the holiday, “Some singing performances were held to commemorate the birthday by the Union of Democratic Women and Socialist Working Youth League, but there were not many people in the audience. There were not many people on the streets. It was a depressing holiday.”

Regarding this mood, an NGO activist who works for defectors in China analyzed hopefully, “This trend does not imply systematic change in North Korean society. There is one significant point; that in national business regarding Kim’s birthday, centralized authoritarian rule and control are crumbling down.”

UPDATE (2/19/2009): According to the Daily NK:

In commemoration of Kim Jong Il’s birthday on February 16th, 15-days of rations were provided to the citizens of Hyangsan and Woonsan in North Pyongan Province.

According to a source, the ration consisted of 2 kilograms of rice, 2 kilograms of noodles and the rest in corn for households with more than four family members. For small households, a kilogram of rice and noodles were given and the rest in corn. Recently, on the farms, provisions have not been sufficient and stealing has grown difficult, so the expectation of our citizens regarding the special rations have been high.

The source explained, “Since last year, with the increase in the number of guards on farms and the strengthening of house searches, the stealing of food from farms has been absolutely impossible.” For the last several years, as rations failed even for farmers themselves, stealing from collective farms as a means of survival had become commonplace.

The source continued, “Inspections have also been taking place at the county and provincial levels every November and December. With the strengthening of the regulations governing grain, stealing has become more difficult. If one is caught, he or she is taken to a labor detention facility.”

All the citizens of North Korea usually receive some form of commemorative product in honor of Kim Jong Il’s birthday, though it is not always in the form of food.

ORIGINAL POST: Although the practice has become inconsistent since the “Arduous March” of the late 1990’s, each year the DPRK distributes gifts or special provisions in celebration the two leaders’ official birthdays (Kim il Sung: 4/15 & Kim Jong il: 2/16).

The value of one’s gift, however, allegedly depends on one’s rank in society. A common farmer might receive a new pair of socks. A senior Worker’s Party official probably receives a good deal more. The distribution of alcohol is popular. One estimate put the value of these special gifts at USD$20m.

This year, Yonhap informs us that children in Pyongyang will receive domestically manufactured peanut candies:

Choson Sinbo, a Korean language newspaper in Japan that usually echoes Pyongyang’s policy, said peanut candies will be added to the gift list for children this year, following the completion of a production line in Pyongyang Vegetable-Processing Factory.

The foodstuff factory that produces noodle, bread and sweets was newly equipped with a peanut candy production facility at the end of last year as “a governmental measure to enhance the people’s diet,” the report said.

It said all of the ingredients are provided by the government.

Lee Seung-yong, a coordinator of Good Friends, a Seoul-based aid group for North Korea, said the cash-strapped North often has to collect ingredients from its citizens to make the gifts for them.

Only 20 percent of North Korean factories are currently operating due to the lack of electricity and raw materials, according to the Korea Institute for National Unification, a state-run think tank in Seoul.

Though some gifts are manufactured domestically by the people, others are donated by foreigners. Expensive gifts are imported by the leadership.

Last year (February 2008), the Daily NK reported that locals actually resented receiving the gifts to some degree because all of the items were available in the marketplaces. Rather than restricting market activity and providing limited goods via the Public Distribution System (PDS), the story reports that people would prefer the government to simply make it easier to conduct business in the markets.

The DPRK has been placing a lot of focus on building/repairing “foodstuff factories” recently. Here is a link to KCNA stories about “foodstuff factories” via the very helpful Stalin Search Engine.

Read the more here:
N. Korean children to get peanut candies on leader’s birthday
Yonhap
2/3/2009

15-days of Food on the Leader’s Birthday
Daily NK
Jung Kwon Ho
2/19/2009

Un-Socialist Inequality
Daily NK
Lee Sung Jin
2/20/2009

Posted in Food, Light Industry, Manufacturing, Public Distribiution System (PDS) | 3 Comments »

Assessment of the 2008 DPRK economy, outlook for 2009

Monday, February 2nd, 2009

Institute for Far Eastern Studies (IFES)
ICNK Forum No. 09-2-2-1
2/2/2009

ASSESSMENT OF THE NORTH KOREAN ECONOMY FOR 2008

In the 2008 North Korean New Year’s Joint Editorial, Pyongyang established the year 2012 as “The Year of the Perfect Strong and Prosperous Nation,” while labeling 2008, “The Year of Turnabout,” and, “The Year of the Betterment of the Livelihoods of the People.” As the year marked the 60th anniversary of the establishment of the Democratic People’s Republic of Korea (DPRK), the regime projected a highly motivated façade, but there was no sign of new changes in the North’s economic policies.

Faced with the inability to produce any substantial results in the realm of international economic cooperation, North Korean authorities focused on how to put a positive spin on international conditions that were tied to the progress of 6-Party Talks. However, no visible measures appeared to emerge. Internally, North Korea’s chronic supply shortages drove further disparities between official and market pricing and monetary exchange rates as authorities were unable to stabilize the domestic economy. The growing global economic instability also caused economic policy makers to act more conservatively.

In 2008, North Korea’s food production in 2008 amounted to 4.31 million tons, recording a 7.5 percent increase over the previous year, while energy production is estimated to have grown by approximately 10 percent. Through joint development projects for North Korea’s underground resources, the North received raw materials for light industries (soap and shoes) amounting to 70 million USD in 2007, and 10 million last year. In addition, DPRK-PRC trade and inter-Korean economic cooperation both grew (DPRK-PRC trade increased significantly, while North-South cooperation grew only slightly), but it is difficult to measure the extent to which these increases impacted the North’s economy.

It appears that overall, North Korean trade and industry has improved since 2007, and the 2008 economic growth rate was positive. However, when estimating the North’s economic growth rate in light of the quickly rising exchange rate for South Korean won, DPRK economic growth for 2008 could be seen as a negative value.

While North Korea’s overall industrial production grew in 2008, when compared to previous years, and the primary reason for such was the refurbishment of equipment in most stable industries, development assistance and heavy oil aid as part of the 6-Party Talks, the provision of raw materials for light industries by South Korea, and the rise in prices on goods internationally.

Because of favorable weather conditions and increased production of fertilizer in the North, the agricultural sector showed a relative increase in production in 2008, despite the suspension of fertilizer aid from South Korea. Grain production was up 300 thousand tons, for an estimated total of 4.31 million tons last year. Boosted energy production was helped by improvements in hydroelectrical production and heavy oil tied to 6-Party Talks, and the provision of parts and materials for power plants, which considerably increased power production, at least in the first half of the year. This played an important role in the increase in industrial operations, as well. As electrical supply is the biggest obstacle to raising the operating rate of production facilities, more power resulted in overall production increases.

The construction sector has focused efforts on Pyongyang, and in particular on efforts to improve the lifestyles of its residents. Housing (averaging 20,000 family dwellings per year), restaurants, waterworks, roads, and other construction and repair projects have been aggressively undertaken.

North Korean authorities emphasized the science and technology sector in 2008, although it appears that the actual impact of this campaign topped out at the supply of some practical technology and the at production facilities, power plants, and other factories, and the promotion of modernization and normalization of industrial production.

At the mid-point of 2008, inter-Korean trade had grown by 1.2 percent compared to the same period the year prior, reaching 1.82 billion USD. The freeze on the annual supply of 400 thousand tons of rice and between 300~350 thousand tons of fertilizer from the South had a negative impact on the North’s food situation. On the other hand, DPRK-PRC trade from January-November 2008 jumped by 29.3 percent over the same period in 2007, considerably more than the 14.9 percent recorded in 2005, the 14.9 percent seen in 2006 and the 16.1 percent rise last year.

The increase natural resource development and improvements in core industries, the possibility of expansion of markets, and the advantage of low-cost labor give China, Russia, and other adjacent countries positive perceptions regarding investment in the North, and as Pyongyang continued to expand economic cooperation with these countries last year, it also improved economic relations with Europe as well as Egypt and other Middle Eastern countries.

PROSPECTS FOR THE NORTH KOREAN ECONOMY IN 2009

If one looks at North Korea’s domestic economic policies, one will see that basically, in the 2009 New Year’s Joint Editorial, North Korea’s domestic and international economic policies have not undergone any significant changes. However, in order to accomplish the goal of establishing a Strong and Prosperous Country by 2012, it is expected that all efforts will be poured into reviving the economy. Based on the Joint Editorial, this year, the North’s economic policy is not one of reform due to transformation of the outside environment, but rather a revival of pas, conservatively grounded economic policy. Regarding international economic relations, the 2008 Joint Editorial specifically stressed the building of an economically strong nation based on the principle of the development of external economic relations, but there was no particular reference to this in 2009.

In 2009, resolution of agricultural problems was again prioritized as the task most necessary for the realization of a Strong and Prosperous Nation by 2012. Along with this, the North’s economic policy for 2009 will prioritize the modernization and normalization of the economy’s ‘vanguard sector’, and it is expected to continue to strengthen efforts to revive the economy. As it continues to work toward creating an environment in which it can concentrate efforts on the building of an ‘Economically Strong Nation’, North Korean authorities are expected to issue new measures to strengthen the economic management system, including the planned industrial system, the distribution and circulation framework, and an effective market management system. The North is also expected to further emphasize efforts to modernize the People’s Economy, as it considers modern vanguard science and technology to be the answer to recovery from its current economic crisis.

There is a possibility North Korea’s foreign trade, including that with China, will shrink in the future, as its external economic activity is hit by the current international economic situation and the rising value of the U.S. dollar and Chinese Yuan. Just as was seen in 2008, with the shrinking growth of the Chinese economy, DPRK-PRC trade will be hit negatively. Progress on the rail link being promoted between Rajin and Hasan, as well as the redevelopment of the Rajin Harbor is also expected to face difficulties. This is likely to lead to further efforts by the North to expand economic cooperation with the EU and Middle Eastern countries.

Despite North Korea’s removal from the U.S. list of terrorism-sponsoring states, because sanctions against North Korea still remain, the North will need to make progress in non-proliferation, human rights improvement, and marketization in order to see real economic benefits from improved relations with the Obama administration. However, because of a lack of confidence regarding market reform, differing stances between the U.S. and DPRK on denuclearization, and deeply rooted mistrust, there is a more than a small chance that progress on the nuclear issue will be stretched out over the long term.

Looking at prospects for the main domestic economic sectors of North Korea, firstly, the amount of development in the energy and mining sectors could take a favorable turn if there is movement on the nuclear issue, and this would have an overall positive effect on the entire industrial sector. The drop-off of demand due to the international financial crisis could have a considerable impact on the North’s mining sector, making it difficult to see much growth past the levels seen in 2008.

In 2009, the supply-demand situation regarding North Korean grains is expected to improve over last year. North Korea requires 5.2 million tons of grain, and is expected to harvest 4.9~5 million tons, falling only 200~300 thousand tons short. This is an improvement over the 790 thousand ton shortfall the North suffered in 2008. However, the actual amount of grains distributed to the people may not increase, because some of the 2008 shortage was relieved through the release of emergency rice reserves, and so some portion of the 2009 harvest will need to be set aside to restock that emergency reserve.

In the manufacturing sector, the increase in electrical production and increase in large-scale equipment operations in metalworks, chemicals, construction materials, and other heavy industries, the supply of materials for light industries as well as fertilizer will be extended, but the reduction of inter-Korean economic cooperation and foreign capital will mean a reduction in the ability to import equipment and materials, making it difficult to meet 2008-level growth in industrial production numbers.

In the construction sector, housing construction in Pyongyang and other areas will not fall off suddenly, but with the anniversary of the founding of the Party Museum upcoming and the impact of the furious construction activity that has been underway, it is likely to slow down in 2009. With North Korean authorities restricting private-sector economic activity, controlling the size of markets, and other measures controlling commerce in the North are expected to strengthen, which will considerably restrict anti-socialist commercial activity. To what extent official commerce networks will absorb this activity will be pivotal.

Trade between North Korea and China is expected to shrink as the global economic crisis drives down the price of raw materials that the North exports to the PRC. Following the North Korean authorities’ enforcement of a measure reducing inter-Korean economic cooperation on December 1, 2008, without improvement in the North Korean nuclear issue, and in U.S.-DPRK relations cooperation between Seoul and Pyongyang will gradually shrivel. Trade with other countries is also expected to fall as a result of the current global economic situation. Therefore, reduction of inter-Korean economic cooperation, North Korea’s principle provider of foreign capital, and sluggish trade between Beijing and Pyongyang will weaken the North’s foreign reserves supply-and-demand situation.

As for the investment sector, if North Korea is to succeed in its push to build a Strong and Prosperous Nation by 2012, it must attract foreign investment through aggressive policies of opening its economy. In order to improve the investment environment, Pyongyang must work more aggressively to resolve the North Korean nuclear issue, but despite the demands of the surrounding countries, it is likely North Korea will insist on recognition as a nuclear power, making it difficult to expect progress on this front. Therefore, foreign investors’ interest in North Korean markets, and North Korea’s assention into international financial institutions through improved relations with the United States, appears to be a long way off.

Posted in 2012 Strong and Prosperous Nation (Kangsong Taeguk), Agriculture, Agriculture statistics, Construction, Food, Foreign aid statistics, GDP statistics, General markets (FMR: Farmers Market), Kim's New Year Address (Joint editorials), Light Industry, Manufacturing, Statistics, Trade Statistics | Comments Closed

DPRK establishing yearly economic development plans

Monday, January 12th, 2009

Institute for Far Eastern Studies (IFES)
NK Brief No. 08-1-9-1
1/9/2009

The Jochongryeon mouthpiece, Chosun Sinbo, reported on January 5 that North Korea is working to boost economic production by establishing “concrete attainment goals” in each sector in a “yearly, phased plan” from last year until 2012 in order to reach the goal of establishing a “Strong and Prosperous Nation” by the 100th anniversary of the birth of Kim Il Sung. The paper reported that the North had not made an official announcement regarding this plan, but that it was currently in the process of implementing a 5-year economic development plan

In the textile industry, North Korea is focusing efforts on upgrading equipment in five weaving factories, including major sites in Pyongyang and Sariwon, with the goal of increasing cloth production 400 percent by 2012. The newspaper also reported that North Korea is aiming to increase coal production over the next few years, with the goal of reaching 1980s-levels of production. Coal production peaked in 1989 at 43 million metric tons, and it is estimated that North Korea has over 20 billion metric tons of coal reserves, but the Bank of (South) Korea estimates that in 2007, the North mined a mere 24.1 million metric tons of coal due to a lack of electricity and spare parts. Many of North Korea’s coal reserves are below the waterline, and require constant electricity in order for pumps to maintain an environment in which mining can take place. Last year, in order to boost coal production, North Korea increased budget allocations for energy, coal and metal industries by nearly 50 percent.

This year’s New Year’s Joint Editorial placed heavy emphasis on the metals industry, and emphasized that efforts last year to modernize equipment and improve technology increased 2008 steel production by 150 percent at the Chollima Steel Complex and the Kim Chaek Iron and Steel Complex. The newspaper stressed that these plans were not merely wishful thinking, but that they were “the basis for meaningful achievements,” pointing out that last year, the North Korean cabinet increased investment into both basic industries and vanguard enterprises 49.8 percent. In 2008, North Korea either refurbished or newly constructed over 140 new production facilities, and, “in particular, actively promoted metal, instrument, science, and light industrial sectors.”

According to the newspaper, North Korea would continue to promote economic development in the new year, as well, citing the current global economic crisis and the need to build an independent economic foundation not reliant on South Korea.

Posted in 2012 Strong and Prosperous Nation (Kangsong Taeguk), Chollima Steel Kombinat, Chongryun, Domestic publication, Institute for Far Eastern Studies, Japan, Kim's New Year Address (Joint editorials), Light Industry, Manufacturing | 1 Comment »

Some “good” news from North Korea

Friday, January 9th, 2009

On market regulations: North Korean authorities issued three decrees restricting market activity: 1. Markets may only open once every 10 days 2. Only vegetables, fruits, and meat from private citizens can be sold in the markets. Imported goods and products of state-owned companies are prohibited 3. To reduce the influence and growth of professional merchants, market booths will be allocated on a first-come, first-served basis (no fixed locations).

The “good” news is that the authorities are having trouble implementing these rules:

A Pyongyang source said in a phone conversation with Daily NK on the 7th, “Until now, markets in Pyongyang have been opening at 2 PM every day and operating normally. They are only closed once a week, on Mondays as usual.”

However, the sale of imported industrial goods from China such as clothing, shoes, cosmetics, kitchen utensils and bathing products has become more restricted in the market. Subsequently, street markets or sales of such goods through personal networks have become increasingly popular.

The source noted, “Inspection units regulate the markets with one eye closed and the other eye open, so it is not as if selling is impossible. With a bribe of a few packs of cigarettes, it is easy to be passed over by the units. However, the sale of industrial goods has rapidly decreased and, if unlucky, one can have his or her goods taken, so the number of empty street-stands has been increasing.”

So many North Koreans now buy Chinese kitchen utensils in the same way Americans purchase cocaine!

But even in Pyongyang they are having troubles enforcing the new rules:

“Since December, rations in Pyongyang have consisted of 90 percent rice and 10 percent corn and in the Sadong-district and in surrounding areas, rice and corn have been mixed fifty-fifty percent.”

“It has even been difficult in Pyongyang, where rations are provided, to convert to 10-day markets due to opposition from citizens, so restricting sales in the provinces, where there is virtually no state provision, is impossible in reality. It is highly likely that the recent measure will end as an ineffective decree, like the ones to prohibit the jangmadang or the sale of grain”[.]

On North Korea’s information blockade: Radio Free Asia published an informative article on the ability and propensity of North Koreans to monitor foreign broadcasts. The “good” news is that access to unauthorized information continues to grow.

The whole article is worth reading (here), but here is an excerpt:

North Koreans manage to gain limited access to foreign media broadcasts in spite of increasing government crackdowns in the isolated Stalinist state.

“We clamped down on the people watching South Korean television sets, but it wasn’t easy,” a North Korean defector and former policeman who monitored North Koreans’ viewing habits said. He said channels fixed by the North Korean authorities could easily be altered to catch South Korean programming.

“You could watch South Korean television such as KBS and MBC in Haeju, Nampo, Sariwon, even in Wonsan,” he said, referring to regions of Hwanghae province, just north of the border with South Korea.

“They reach also to the port cities near the sea. But you can’t watch them in Pyongyang because it’s blocked by mountains.”

He said the police themselves used to watch South Korean television “all the time” along with their superior officers.

“We would enjoy what we watched, but outside in public, we would praise the superiority of our socialist system. We knew it was rubbish.”

“According to North Korean defectors interviewed who came to South Korea right after living in the North, educated, intelligent people in North Korea do listen to foreign stations despite the inherent danger,” Huh Sun Haeng, director of the Center for Human Rights Information on North Korea, said in a recent interview.

He said he made good money fixing people’s radios, so they could get better reception of foreign broadcasts.

“I made good money readjusting channels on radios, or upgrading them with higher frequency parts for local people who want to listen to broadcasts other than the North’s state-run radios. There were at least a few hundred people that I know of who listened to foreign broadcasts,” he said.

He said no television reception reached the northern part of the country near the Chinese border, so people there watched recorded programs on videotape and video CD (VCD) instead.

Read the full articles here:
Pulling Back from Converting to 10-day Markets
Daily NK
By Jung Kwon Ho
1/9/2009

Growing Audiences for Foreign Programs
Radio Free Asia
Original reporting in Korean by Won Lee
1/8/2009

Posted in Agriculture, Communications, Food, General markets (FMR: Farmers Market), Labor conditions/wages, Light Industry, Manufacturing, Public Distribiution System (PDS), Radio, South Korea, Telephones | 1 Comment »

DPRK announces plan to solve clothing shortage

Tuesday, January 6th, 2009

Institute for Far Eastern Studies (IFES)
NK Brief No. 09-1-6-1
1/6/2009

Jo Jong-woong, assistant director of the North Korean Department of Light Industry, announced that this year, efforts would be concentrated on production of daily necessities, with a priority on resolving clothing issues.

In an interview on January 4 with the Chosun Sinbo, mouthpiece for the General Association of [North] Korean Residents in Japan, Jo stated, “Currently, the most important sector is textiles,” and, “regarding the easing of the people’s problems, and regarding our production of necessities as well, we have decided to move forward with resolving issues related to clothing shortages first.”

Jo emphasized that the government had been working since 2006 to revitalize the Pyongyang Weaving Factory, and since last year, with all equipment upgraded, quality and production capacity had been increased “several times over.”

He also stated that as much as possible, domestic resources would be used for raw materials, with those unavailable or in short supply being imported in order to meet demands of the factories.

Since 2006, South Korea has provided the North with the necessary materials for the production of shoes, clothing, soap and other daily necessities, in return for mining rights and production distribution rights.

Jo added, “We are pushing light industries to create a country in which all the people can live comfortably and affluently,” and stated that light industries were working to broaden the variety of goods available, while at the same time maximizing the quality of products manufactured for the good of the people.

Posted in Clothing, Light Industry, Manufacturing | Comments Closed

DPRK manufactures DVD players

Friday, December 26th, 2008

According to an anonymous qoute by a South Korean intelligence official in the Choson Ilbo:

“Especially, North Korea developed its own DVD player in 2006 with a view to developing its own IT industry, this ironically provided momentum for the spread of South Korean soap operas.”

I had assumed the DPRK imported DVD players.

Read the full article here:
Pyongyang Bids Korean Wave to Recede
Choson Ilbo
12/26/2008

Posted in Computing/IT, Film, Light Industry, Manufacturing | 2 Comments »

Inter-Korean trade falls for second straight month

Saturday, December 20th, 2008

Quoting from the Korea Times:

Inter-Korean trade fell 27.7 percent in November from a year earlier to $142.72 million, according to the ministry data posted on its Web site.

“Payments to North Korea are mostly made in dollars or euro, so the weak Korean currency has been the primary reason behind the falling trade,” a ministry official was quoted as saying.

More than 80 South Korean firms produce watches, shoes, clothes and kitchenware at a joint industrial complex in the North’s border town of Gaeseong. North Korea also exports sand to the South.

In October, South and North Korea traded goods and services worth $163.06 million, down 23.2 percent from a year earlier.

Meanwhile, inter-Korean trade from January to November reached $1.69 billion, an increase of 3.7 percent from the same period in 2007.

And According to the Hankyoreh (h/t OneFreeKorea):

According to a report, seven companies have canceled their contracts to build facilities at Gaeseong complex since October. Three of the seven bought space at a site reserved for machinery and metal cooperatives in June, and were in the process of constructing or designing factories. The report was submitted to Rep. Chun Jung-bae of the main opposition Democratic Party by the division supporting the Gaeseong Industrial Complex at the Ministry of Unification.

Two companies are in situations unrelated to the breakdown in inter-Korean relations, one had a fire last summer and another is suffering from losses incurred as a result of investment in KIKO, “knock-in knock-out” currency options trading.

The remaining five companies were believed to have abandoned their plans because of the deterioration in inter-Korean relations. An official at one of the five companies, which canceled its investment contract in December, said, “Although the economic crisis was one of the reasons why we canceled the contract, the main reason was that business prospects have darkened due to strained inter-Korean ties. Other companies that moved to (the Gaeseong complex) at the same time also decided to cancel their contracts for the same reason.”

In canceling their contracts, the seven companies forfeited their initial investments, which ranged from 17 million won (US$12,500) to 70 million won each. Land at the Gaeseong Industrial Complex was sold at 45,000 won per one square meter and the companies paid 10 percent of that price as part of their deposit.

Seven other companies also canceled their contracts last year, but they did so after an on-site feasibility study was conducted and it was determined that their businesses were not financially viable. All seven companies were able to receive their deposits under a special provision on contract cancellation, which allows companies to receive their deposits if the contract is canceled within six months of when it was signed.

The companies that canceled their contracts this year were not able to take advantage of the provision because they canceled over six months after signing their contracts.

There are growing concerns that more companies may be canceling their contracts as well. The head of Company “H,” who signed a contract to build a facility at the Gaeseong complex last year, said, “Though I would lose my initial investment of several millions of won, I’m considering canceling the contract because the tensions inter-Korean relations are likely to continue for another five years.”

Read the full story here:
Inter-Korean Trade Falls for Second Straight Month
Korea Times
12/20/2008

More companies cancel contracts at Gaeseong complex
Hankyoreh
12/17/2008

Posted in Economic reform, Foreign direct investment, Joint Ventures, Kaesong Industrial Complex (KIC), Light Industry, Manufacturing, South Korea, Special Economic Zones (Established before 2013), Statistics, Trade Statistics | Comments Closed

DPRK pushes to meet yearly production plans

Wednesday, December 17th, 2008

Institute for Far Eastern Studies (IFES)
NK Brief No. 08-12-17-1
2008-12-17

As the end of the year approaches, North Korea has launched a ‘Year-end Battle’ in order to encourage every sector of the economy to meet annual production targets, without exception.

On December 1, (North) Korean Central Broadcasting announced, “workers, laborers and technicians of the harvesting industry sector overcome difficulties and barriers with indomitable moral strength, while thoroughly accomplishing the (New Year) Joint Editorial’s fighting tasks, focusing all strengths on the struggle to brightly wrap up the deeply meaningful year,”while also reporting on the production innovation of the nation’s mining and smelting facilities.

The program also announced that each North Korean region’s hydroelectric power plants, “brightly bring the year to a close, while the issue more important than any other is ensuring the People’s Economy electrical use, strongly demanding power production, is supported,” reporting that efforts were being focused on ensuring power production equipment was operating at full capacity, and electrical production was being expanded.

Rail transportation in Pyongyang, Kaechun, Anju, and other areas also reported high achievements in distributing coal for electrical production and ores sent to metal factories, as efforts are put into the ‘Year-end Battle’, according to the broadcasters.

One member of the North Korean Cabinet’s office of light industry announced on November 30 that, in accordance with this year’s New Year Joint Editorial’s ‘prioritization of the lives of the people’, the government invested in the Sariwon Weaving Factory, the Haeju Textile Factory, etc., “struggling to produce more good-quality cloth” in textile factories under the guidance of the office of light industry’s department of textile industry management.

North Korea’s broadcasts also reported that the Ranam Coal Mine Cooperative Enterprise, the Musan Mine Cooperative Enterprise, the Chungjin Tractor Accessories Factory and others were also engaged in this ‘Year-end Battle’.

In South Hamgyung Province, a new lecture hall and electronic library were built at the Hamheung Medical Science College, and construction was underway to expand the number of classrooms. Also, the Heungnam Basic Foods Factory, the Hamheung Orthopedic Surgery Hospital and the Sinheung Irrigation were under construction as each locality is pushing forward with selected economic construction projects.

Posted in Agriculture, Clothing, Dams/hydro, Electricity, Energy, Institute for Far Eastern Studies, Light Industry, Manufacturing, Railways | Comments Closed

Behind North Korean Plan to Reopen State Stores

Wednesday, December 10th, 2008

Daily NK
Moon Sung Hwee
12/10/2008

The North Korean authorities recently announced the intention to sell all industrial products in state-operated stores, soon after announcing the revised “10th-day farmers markets,” which open only on the 1st, 11th and 21st of every month, starting from next year.

According to an inside source in North Hamkyung Province, a new instruction on the sale of industrial products in state-operated stores was introduced during the latest cadres’ lectures. As rumors of the large-scale entry of Chinese goods onto the market due to Chinese loans circulate among people, there has been in a flutter in the market.

The source stated that the idea of industrial product sales was introduced during a cadres’ lecture on the 29th of November under the title, “measures to improve the current situation and people’s lives,” which also explained the transformation of the current market system into the “10th-day farmers market” system.

In the source’s opinion, “It signifies the government’s attempt to monopolize the industrial-product market, which was actively and spontaneously established by the people after the ‘march of tribulation’ in the late 1990s. Industrial goods to be sold in the state-operated stores would include both Chinese and North Korean products.

During the lecture, it was stated that “All industrial goods that have been passing through the jangmadang (markets) must now be sold in the state-operated stores and only vegetables or certain agricultural products can be sold within the farmers markets,” which suggests the prohibition of individuals selling food-related products and industrial goods.

With regard to the backdrop of this policy, the authorities explained that, “The current market was a temporary measure taken by the state considering the difficult situations caused by the march of tribulation. However, the markets after some time deviated from the state’s intention and socialist economic principles and have become a hotbed of crimes generating capitalist and anti-socialist trends. Therefore, we are ridding ourselves of all markets and reviving the farmers market.”

The source explained that this measure does not seem to “simply control the markets. But if they begin selling industrial products in the state-operated stores, they would be able to circulate money within the regime that has been circulating within private markets and among individuals by tying purchase profits to national banks.

He said, “Due to the jangmadang, the gap between the rich and the poor has widened. And, because money is not flowing within the regime, the authorities are getting rid of private sales to revive the banks so as to recover the regime economy… It seems the state-controlled economy will become better next year” he added.

However, the source also relayed that “Although they announced the selling of industrial goods only in the state-operated stores from next year, nothing, regarding exactly when and how, was mentioned during the lecture.”

“There is also another rumor that even ‘procurement stores’ would have to sell products on the same price level with the state-operated stores, or they would have to close down. It basically signifies that the regime will not permit any form of private sales, by selling all products that had been sold by individuals” he added.

The source reported that there have been heated debates on this decision among North Koreans.

“Famers gladly took this decision that industrial goods will sell in state-operated stores because they have been complaining that they sold agricultural products at next to nothing while buying industrial goods at such a high price. They are expecting that industrial goods will cost less than now” the source reported.

“However, workers in urban areas are extremely concerned that they cannot sell anything in the jangmadang. An average workers’ salary is 1,500 North Korean Won and if individuals are not permitted to sell, workers’ families will be harshly affected” he forecasted.

The source continued on and said, “Even though they say workers get paid well, how are they expected to live when a pair of military boots costs 9,000 North Korean won. One month’s salary is not even half a kilo of rice.”

The source in the end expressed concern because workers began “explicitly complaining about cadres who only fill themselves up. I personally think that there will begin a massive war within the markets starting from New Year’s Day”.

Posted in Agriculture, Black markets, China, Economic reform, Food, General markets (FMR: Farmers Market), Labor conditions/wages, Light Industry, Manufacturing, Price liberalization | 2 Comments »

North Korean Economy Watch