Archive for the ‘Light Industry’ Category

Kaesong Site Expedites S-N Economic Integration

Monday, April 30th, 2007

Korea Times
Ryu Jin
4/30/2007

At a quarter to 7 a.m. on a normal weekday, a rush to work opens the morning of a North Korean town seated just minutes away from the heavily fortified border with South Korea.

Several blue commuter buses, just like ones that can be seen in downtown Seoul, stop in front of a sign reading, “Kaesong Industrial Zone’’ and spew out hundreds of North Korean workers.

As the working time draws near, they hasten their steps toward their respective workplaces, owned and managed by people from across the border. Some 13,000 North Korean workers, mostly women in their 20s and 30s, spend most of the daytime in the small capitalist enclave in the southwestern part of their Stalinist nation.

“Welcome!’’ “Good Morning!’’ Several South Koreans say as they greet their North Korean colleagues in front of the main gate of Shinwon Ebenezer. Hwang Woo-seung, director of the apparel company’s Kaesong branch, says that they have never skipped a day _ regardless of rain or snow _ without such greetings since the factory went into operation in 2004.

Closing hours are by and large around 5 p.m. But almost half of the 13,000 laborers work overtime until 7 p.m. in order to return home early on Saturdays. By the first half of 2008, the number of North Koreans working in the joint industrial park is expected to reach 100,000, according to South Korean officials.

From Seeds to Young Plants

Launched three years ago, the Kaesong Industrial Complex has been a gauge of the situation on the Korean Peninsula, where hundreds of thousands of troops confront each other across the border, which remains as the last flashpoint of the Cold War era.

Operations, for example, had nearly stopped late last year in the wake of a nuclear test by the North. Since the Feb. 13 denuclearization agreement, however, businesses have gone back to normal.

A free trade agreement (FTA) struck in April between South Korea and the United States, which opened up the possibility of the Kaesong products being exported to America as “made in Korea’’ goods, also breathed a fresh enthusiasm into the industrial zone.

Foreign eyes watching the complex are also changing. A growing number of foreign delegates are coming to the zone, and their evaluation has been quite positive. Moody’s Investors Service analysts Thomas Byrne, who visited the site on Feb. 9, said Kaesong is the “optimistic future’’ of South and North Korea.

Currently, 22 firms _ mostly small- and medium-sized ones _ are making clothes, shoes, watches and kitchen pots in the 1 million-pyong (3.3 million-square-meters) pilot site of the Kaesong complex, which will sprawl over a total 20 million-pyong (66 million-square-meters) in the coming years.

Since the first products came out in December 2004, annual output has increased from $14.9 million (13.8 billion won) in 2005 to $73.7 million (68.4 billion won) in 2006.

Despite potential risks stemming from political uncertainty, the zone has an inescapable economic logic _ the cheap labor and land of the North combined with the capital and technology of the South.

Proximity also makes for an attractive alternative for South Korean firms looking to move their plants to China. The distribution cost in Kaesong is one-tenth that of China, land price one-fifteenth and the labor cost one-twentieth, according to statistics.

Some 300 companies are expected to fill up the whole first-stage experimental site by the first half of next year, hiring up to 100,000 North Korean workers.

“It means that an up-and-coming new city is being created in the border area with a total population of about 300,000 to 400,000, when the families of the workers are added,’’ says Kim Dong-keun, chairman of the Kaesong Industrial District Management Committee (KIDMAC).

Kaesong hopes to invite as many as 3,000 companies eventually, employing some 350,000 workers by the mid-2010s, when the fully-fledged complex (roughly the same size of Changwon) is completed with apartment buildings, hotels, shopping centers and even an amusement park and golf courses.

Way to Integration

North Korea, for its part, envisions Kaesong as its own version of Shenzhen, one of the first “special economic zones’’ in China, and hopes that the new industrial site could jump-start its near-bankrupt economy.

Since the mid-1990s, when it was severely hit by great famines amid the first nuclear standoff with the United States, North Korea has remained a wasteland plagued by the so-called triple distresses _ the shortage of food, cash (foreign exchange) and energy.

With the end of the Cold War, North Korea lost hefty aid from China and the now-defunct Soviet Union, which had propped up its flagging economy. In a desperate move, Pyongyang launched an experiment with the free market in July 2002, deregulating prices and hiking salaries.

North Koreans had also anticipated the businesses with South Korea, which started in the wake of the historic inter-Korean summit in 2000, to bring money into the cash-strapped country.

But the ambitious tour project at Mt. Kumgang above the eastern side of the border had been too fainthearted to turn profitable because it was limited only to tourists.

Kaesong was a different story. While South Koreans saw the tour project largely as symbolic, they were ready to offer more financial incentives for companies to invest in the border town.

For the South Korean decision-makers, Kaesong became the site of an experiment to transplant capitalism to the Stalinist state, plagued by an inefficient bureaucracy and pervasive malnutrition.

Of course, the venture poses risks for the tightly controlled hermit kingdom, which has been ruled by hereditary “monarchs’’ _ the late leader Kim Il-sung and his son Kim Jong-il _ for more than half a century. A major city with about 150,000 residents, Kaesong will inevitably be exposed to what the North Korean leadership calls decadent Western culture.

Suh Ye-taik, an executive director of Hyundai Asan, selected by the North as its major business partner, recalls that it was an offer that nobody expected when the North Koreans first proposed Kaesong. Pyongyang originally wanted to develop other places such as Shinuiju and Haeju.

“It was an unexpected offer in political terms,’’ he said. “But we decided to opt for Kaesong in consideration of the proximity and other conditions of location.’’

Kaesong, seated about 140 kilometers south of Pyongyang and some 60 kilometers north of Seoul, is on a point of strategic importance in the case of a military conflict between the two Koreas. North Korea even yielded some kilometers by withdrawing its conventional artillery.

Kim Jong-il, however, seems to be well aware of the fact that his own hold on power depends on reviving the economy. Kim Heung-kwang, a defector from the North who had worked as a professor at Pyongyang Computer Technology University, predicted in a recent thesis to the Korea Institute of Science and Technology Information (KISTI) that North Korea would open up the Internet to individuals as early as 2009.

“Security guarantees and restoration from the economic plight are the top priorities for the survival of the North Korean regime,’’ said Yang Moo-jin, a professor at the University of North Korean Studies in Seoul. “They realize opening is the only way out of their predicament.’’

While Kaesong is a touchstone for economic integration in the unification process, the workplaces in the industrial zone are test boards for cultural and societal assimilation of the two Koreas, which have walked different paths for the past several decades since the 1950-53 Korean War.

Shinwon is a good example. South Korean managers say they now see drastic changes in the attitudes of North Korean workers. People from across the border had kept an awkward silence in the first years. But smiles and small chatter has become part of the atmosphere.

“The quality of the products here is good because the Northern workers are very productive,’’ said Hwang, the head of the apparel company’s Kaesong factory. “They now learn skills much faster than they did in the initial years.’’

They are also getting familiar with dialects from the other side of the border. In the three-storied factory of Stafild that produces medical walking shoes by some 1,800 North Korean workers, visitors overheard “One for all, all for one’’ _ the motto of the Stalinist state.

For Brighter Future

While its ambition is grand and lofty, the Kaesong complex still faces major hurdles _ both from inside and outside. One of the biggest problems is the U.S. economic sanctions against North Korea, which ban the sale or shipment of key strategic goods such as high-tech computers.

Though the South Korean government is trying to attract the investment of some information-technology (IT) companies in the long term, no high-tech firms have so far advanced in to Kaesong.

So, what the zone really needs is a genuine political thaw between North Korea and the U.S., government officials as well as experts point out. A strong inter-Korean relationship is another important factor to affect the joint project.

Labor conditions in Kaesong are a problem of its own. The average wage is only $57.50 per month, which is not provided in cash. North Korean workers receive coupons to get the necessities of life, though their standard of living is much higher than those in other areas of the country.

Largely focused on red brick industries, which led the economic growth of the South until the 1980s, some workplaces in the zone are exposed to dangerous environments and workers are not entitled to the core labor rights, such as the right of collective action.

Foreign investment will be a touchstone of the venture’s success in the long term. South Korea plans to invite U.S. investors to the industrial estate in October in an effort to expedite foreign investment.

“Foreign investment will help stabilize the operation of the industrial complex and will be a good experience for the management of other firms,’’ said Kim Dong-keun, the KIDMAC chairman.

South Korean officials also expect that from now on some large South Korean enterprises will come into the zone to continue the development of the Kaesong industrial park.

“So far, the zone has been occupied largely by small- and medium-sized companies,’’ Unification Minister Lee Jae-joung said at a breakfast lecture late last month. “We expect the international credit rating of Kaesong will improve if leading enterprises move in.’’

On April 27, the National Assembly of South Korea passed a law that supports the industrial zone. Firms operating in Kaesong will be provided with the same benefits enjoyed by the small- and medium-sized companies in other areas such as a 7-percent tax exemption. South Korean workers in Kaesong will also be eligible for the Labor Standard Act and the country’s four major insurance policies.

“Kaesong Industrial Complex is a win-win situation for both the South and the North,’’ Kim said. “Both economies will complement each other through the project and will be the steppingstone to national unification and integration.’’

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Gaeseong to be exempt from labor laws

Sunday, April 22nd, 2007

Korea Herald
4/23/2007

South Korea and the United States have agreed not to apply International Labor Organization regulations to an inter-Korean industrial park in North Korea’s border city of Gaeseong, a South Korean lawmaker claimed yesterday.

Kim Won-woong, head of the National Assembly’s unification, foreign affairs and trade committee, said the Gaeseong industrial park is certain to remain an exception to the ILO’s labor rules, paving the ground for Seoul and Washington to designate Gaeseong as an “outward processing zone” (OPZ) on the Korean peninsula.

Gaeseong, located just north of the inter-Korean border, currently houses 23 manufacturing plants, which combine South Korea’s capital with North Korea’s cheap labor.

Under an FTA deal concluded at the beginning of this month, South Korea and the United States agreed to set up a joint OPZ review committee that will identify areas in North Korea that might be designated as OPZs and consider their qualifications if they meet the necessary criteria, including labor and wage practices. But the labor sector was expected to pose a dilemma as North Korea is not a member of the ILO, which stipulates three basic labor rights, namely the right to unionize, collective bargaining and industrial action.

“South Korea and the United States agreed to consider North Korea’s non-ILO member status and unique labor circumstances in the designation of OPZs in the communist state,” said Kim, citing a document he obtained from the Foreign Affairs and Trade Ministry.

In related news, the two Koreas agreed yesterday at the 13th economic cooperation talks in Pyongyang to continue discussing how to fortify the operations at the industrial complex from next month.

Gaeseong park is considered a signature inter-Korean project symbolizing the efforts of expanding exchanges.

South Korea, under the engagement policy of President Roh Moo-hyun, aims to gradually open up North Korea towards market economy for an eventual reform.

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North Korea Authorities, “Take Care of Kim Il Sung Birthday Presents to Citizens on Your Own.”

Monday, April 16th, 2007

Daily NK
Kim Young Jin
4/16/2007

The North Korean authorities ordered that the holiday gifts given to North Korean citizens for 4.15 Kim Il Sung’s birthday, Sun Day, be distributed by each provincial body.

The leader of a people’s unit Mr. Choi of a district in Hyesan, Yanggang said in a phone conversation with Daily NK on the 13th, “The order came from the center to supply liquor and sweets through the body.”

He said, “A ‘4.15 subdivision committee’ has been organized in each province and has been going down to the commercial offices and food factories to directly inspect production.” The committee is a team that exists for the people who were temporarily transferred from party and political organizations for the seasonal production of sweets for distributing to children on Kim Il Sung’s birthday

This order’s intention can be interpreted as North Korean authorities trying to raise the holiday atmosphere by sparking competition among the provinces to celebrate Day of the Sun as “the year of victory in Military First Ideology.”

”The manager who cannot even provide one bottle of alcohol is not entitled”

However, the central party provided the order without a realistic plan of action, leaving it in the hands of factory and enterprise offices.

Another well-informed source stated that, “The central party has sparked a competition amongst the provinces to see which municipality provides more.”

On the 80th birthday anniversary of Kim Il Sung in 1992, when the “Supply Diversification” competition was kindled, the news spread that Junchun Commercial Office in Jakang, to where Jung Chun Sil (a member of Supreme People’s Committee) belongs, supplied 13 kinds of socks, candles, matches, and alcohol, but most of the provinces stopped after passing out one bottle of drink.

The well-informed source also stated that more than one bottle of drink could not be distributed this time. Soju is an item which cannot be left out from the holiday provision. Each provincial organization was known to bluff. “Factory managers who cannot provide at least one bottle of drink should forfeit their positions.”

At a food factory producing drinks, 10 hours of electricity was provided and the factory entered production round the clock, but it still had difficulty due to the lack of electricity and raw materials.

Demand-driven supply is also insufficient. After supplying drinks produced at this factory to organizations of influence, coal and mine workers, and laborers who work in dangerous jobs, there is not enough for all citizens.

As a result, authorities are asking factory and enterprises offices themselves to provide the laborers. Most factories are ordering from individual home-brew traders.

Failure in “gift” production for children

In the midst of this, it has been known that units which have taken charge of production of gift-use sweets are in a state of panic.

A part of the provinces used corn taffy and substituted corn instead of flour because of the lack of candy powder (sugar). Also, provisions had to be completed by April 13 to 14th, but the production line could not operate due to the lack of electricity, so goods could not ensure within the planned time.

Until the early 1990s, the central party promised flour, sugar, and other materials, but due to the worsening of financial difficulties, it decreed that provinces themselves take care of these goods. After the 65th birthday anniversary of Kim Il Sung in 1977, North Korea provided sweets to pre-school students who are at least five-years old to 11-year old elementary school students as a way of boosting their devotions but under the pretext of “gifts.”

Defector Mr. Kim reflected, “I can remember, after going up one by one to receive gifts, approaching the portraits of Kim Il Sung and Kim Jung Il and bowing. In 1970-1980, the snacks and sweets were at least 10 different kinds, but now, there is only corn snack and one package of candy.”

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Supreme People’s Assembly’s 2007 Budget… Financial Estimate $3.1bn

Friday, April 13th, 2007

Daily NK
4/14/2007
Park Hyun Min

Changes to the North Korean Cabinet Ministry, Kim Young Il elected as the new Prime Minister, Kim Young Choon as Vice-Chairman of the National Defense Commission

At the 5th round of the 11th Supreme People’s Assembly announced on the 5th, the change in economic policies that would in future concentrate on the people’s livelihood and suspend the advancement of technological skills.

In the report, the deputy Prime Minister revealed that the major economic task for the upcoming year included light industries and agriculture, which had already been completed, and the improvement of the people’s livelihood. He said that the issue of social economic management had been discussed and that it would be resolved “our way.”

The 2007 report by the Supreme People’s Assembly proposed to, i) improve the basic standards of living in relation to agriculture and light industries, ii) enhance the manufacture of potential energy starting with the prioritizing the department into 4 divisions, iii) modernization of public economy and iv) manage sosicalistic economy through the our own.

Furthermore, foreign collaboration was proposed to further investments into advanced technology. In relation, the third phase proposal was made over a 5 year period (`08~`12) to improve technological skills such as the advancement of basic skills, high technology and software.

In contrast to last year, North Korea estimated an increase in revenue at 433.2bn won ($30.9bn, $1=141won). Last year, 5.9% were considered the public revenue, whereas this year, this figure was raised to 7.1%.

As for tax resources, national business gains tax was increased to 6.4%, cooperative organizations fund set at 4.5%, depreciation amount 9.6%, real estate fees 15.4%, and social welfare tax at 15.1%

Regarding expenses, science-technological skills among people’s economic expense increased to 60.3%, net business income is estimated to be 2% which will aid new measures to develop enterprise skills. In addition, proposals were made to increase agricultural expenses to 8.5%, light industries to 16.8%, energy, coal, metalwork and railroad to 11.9%

In relation to this, a South Korean governmental official revealed, “At this Supreme People’s Assembly, economic improvement proposal was mainly revealed without any announcement on foreign policies or sort of legislation of reform or openness.

Since last year, there have been rumors that a change in government would occur amidst the North Korean Supreme People’s Assembly. While Park Bong Joo stepped down from his position, Kim Young Il, formally in charge of transportation was elected as the new prime minister. It has been three and half years since Park Bong Joo first took his prime ministerial post at the first round of the 11th Supreme People’s Assembly in September 2003.

Former Prime Minister Park is known to have ceased his duties since last year June. He has been suspected of transferring money from the agriculture’s oil funds. At the 20th High Level Cabinet Talks in Pyongyang in February, a South Korean representative did mention that Prime Minister Park had made a welcoming speech. However, it seems that he has been ousted from his position.

Additionally, with the death of Yeon Hyung Mook in October 2005, Kim Young Choon is known to have succeeded the position of Vice Chairman as well as taking on the role of military counselor.

Regarding, the new appointments, a governmental official said that the Cabinet’s Prime Minster, Kim Young Il would aim to solve the economic issue while Kim Young Choon as the new Vice Chairman would aim to organize the structure of the ministry and strengthen the military.

While Kim Jong Il did not attend the last round of meetings, the fact that he participated in the recent meeting has also gathered much interest.

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N. Korea to focus on improving livelihoods this year

Thursday, April 12th, 2007

Yonhap
4/12/2007

Saddled with a severe food shortage problem, North Korea is poised to raise people’s standard of living this year by concentrating on agriculture and light industry.

In a session of its parliament held on Wednesday, North Korea said its major economic goal is “to improve the living standards of people on the basis of the existing foundations of agriculture and light industry.”

In a related move, the North replaced Prime Minister Pak Pong-ju, the control tower of its economy. It named Transport Minister Kim Yong-il as its new premier. Pak is believed to have been in conflict with senior North Korean officials over electricity supplies.

“Kim is in his early 60s, relatively young for North Korean cabinet members, and he has no prestigious political or educational background. He seems to be credited by his track record of economic expertise and achievement,” a senior Unification Ministry said, asking to remain anonymous.

The impoverished country has depended on international handouts to feed a large number of its 23 million people.

In a recent meeting with U.N. World Food Program officials, a North Korean vice agriculture minister acknowledged that the communist country has a shortfall of about 1 million tons of food and called for aid from the outside world.

“The cabinet will concentrate state efforts on agriculture this year, too, considering it as a mainstay, to thoroughly implement the WPK’s policy of agricultural revolution and make a signal advance in the efforts to settle the people’s problem of food,” Vice Premier Kwak Pom-gi said in a report to the delegates at the session. WPK is the acronym for the North’s ruling Workers’ Party of Korea.

To that end, North Korea plans to raise spending on agriculture by 8.5 percent and on light industry by 16.8 percent compared with last year.

North Korean leader Kim Jong-il also attended the meeting of the parliament, the Korean Central News Agency (KCNA) reported.

The North is officially headed by its titular leader Kim Yong-nam, the president of the Presidium of the Supreme People’s Assembly, the country’s parliament.

But Kim Jong-il rules the country with an iron grip. He is officially the chairman of the National Defense Commission and general secretary of the ruling Workers’ Party. He reserves the office of president for his late father as a way of showing filial piety.

The North also said it will kick off a drive to modernize major light industrial factories and reinforce the production of daily necessities, while state efforts will be channeled into the construction of houses in major cities, the KCNA said.

The North earmarked 40.8 percent of the total budget expenditure for the national economy this year, and in particular, spending on the development of science and technology will rise as much as 60.3 percent compared with last year.

Based on the report from the North’s parliament, South Korea’s Unification Ministry estimated the North’s 2007 budget at US$3.09 billion, up 5.9 percent from a year earlier.

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Education institutions in the DPRK

Thursday, April 5th, 2007

NK Choson.com

Kimchaek University of Technology, the top college of science and engineering as well as a central higher educational institution of North Korea, is located in Pyongyang, not in Kimchaek.

Colleges and universities in North Korea are classified into two: central and regional. But criteria for the classification differ from those of the South. It’s wrong to assume that those located in the capital are central institutes of higher education, and those housed in provincial cities and towns are regional ones.

Central higher educational institutions as referred to in the North denote “central-grade institutions of higher education founded in Pyongyang and elsewhere in the provinces for the purpose of educating prospective national leaders, engineers and scientists.” Accordingly, colleges and universities located in Pyongyang are not necessarily central institutions of higher education; nor those situated in the provinces are all regional colleges and universities.

Chongjin Mining and Metallurgy College, the only one of its kind not only in the North but in Asia, and Wonsan Agriculture College, the first of its kind in the North, for example, are definitely central colleges, though the former is located in North Hamgyong Province, and the latter in Kangwon Province, respectively. The same applies to Shinuiju Light Industry College located in North Pyongan Province; Sariwon College of Koryo Pharmacy in North Hwanghai Province; and Hamhung Hydrographic and Power College in South Hamgyong Province. Though located in provincial cities, they are all central colleges founded with regional features taken into account.

On the other hand, Pyongyang Machinery College, Pyongyang Agriculture College, Pyongyang Printing Industry College, though all are located in the capital, are classified as regional colleges. Each province or special city under the direct jurisdiction of the central government in the North has two normal and teachers colleges and one arts and physical education colleges, all of which are typical regional ones. Factory, farm and fishing farm colleges attached to industrial entities also belong to the regional category.

What is the central criterion separating central high educational institutions from their regional counterparts? It depends on who administers and manages them. Those administered directly by the Education Ministry are central institutions of higher education; those administered by the Education Department of the People’s Committee of a relevant province or special city placed directly under the jurisdiction of the central government are regional colleges or universities. Needless to say, no regional institutions of higher education are free from Education Ministry guidance; the guidance is only given indirectly through the People’s Committee Education Department of a pertinent province or special city. In an exception, Kim Il Sung University, the most prestigious higher educational institute in the North, is placed under the direct jurisdiction of the cabinet.

Central colleges and universities, wherever they are located, recruit students from across the land, and their graduates are assigned to any agencies, factories, corporations or research institutes in the country. On the other hand, only seniors and graduates from senior high schools in pertinent provinces and special cities are eligible to enter regional institutes of higher education, whose graduates, when given job assignments upon graduation, are confined to offices or factories in their respective administrative areas.

North Korea has quite a few institutes of higher education that are called colleges, entirely unrelated to central and regional colleges, but whose nature and curricula are totally different. The Yalu River College trains espionage agents sent to the South under the jurisdiction of the Reconnaissance Bureau of the Ministry of People’s Armed Forces; Pyongyang College of Technology, also called the State Security Agency Political College, produces prospective leaders of the intelligence agency.

The Automation College, once called Mirim College, is a special college founded for the purpose of turning out manpower needed for waging electronics information warfare, placed under the jurisdiction of the Ministry of the People’s Armed Forces. The College of People’s Economics and International Relations College are institutes retraining leading staff of the party headquarters; the College of Communism run by each province or special city is a special educational institute retraining junior leaders of regional chapters of the Workers’ Party.

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N. Korea welcomes S. Korea-U.S. FTA for leaving room for Kaesong complex

Monday, April 2nd, 2007

Yonhap
4/2/2007

North Korea has welcomed the just-signed free trade agreement between the South and the United States on Monday, seeing its possible role of promoting an inter-Korean industrial complex in its territory, Pyongyang’s management body of the complex said.

In the trade pact, the two sides agreed to hold further negotiations on goods produced in the Kaesong industrial complex, which Seoul wants to be treated as made in South Korea.

Pyongyang sounded upbeat that the pact has left room for the inclusion of Kaesong goods in the trade deal.

“We welcome sincerely (the fact) that the South Korea-U.S. FTA agreement has prepared the foundation for the goods from the Kaesong industrial complex to be treated as made in South Korea,” the Kaesong Industrial District Management Committee, which oversees the joint project between South and North Korea.

The Kaesong complex, just a few kilometers north of the inter-Korean border, is one of two flagship projects the South operates in the spirit of reconciliation with the North following their historic summit in 2000. Over 11,000 North Korean workers are employed by dozens of South Korean companies producing garments, utensils and other labor-intensive goods. Another reconciliation project is the operation of tours to the North’s scenic Mount Geumgang.

South Korean companies operating in Kaesong say the inclusion of the goods in the FTA is crucial, as this will open the doors for their exports to the world’s largest market and will also provide a template for future trade deals with other countries.

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Sinuiju SAR/SEZ version 2: Bidan and Wihwa islands

Friday, March 23rd, 2007

According to Yonhap:

North Korea is considering establishing a special economic zone on two small islands bordering China to help resuscitate its moribund economy, a South Korean source said Friday.

The North has been pushing to form a free trade zone on the Bidan and Wihwa islands on the Yalu River on the western border between North Korea and China, and has sounded out South Korean companies on their investment plans for the area, the source privy to inter-Korean economic projects said.

“The North has been mulling building the zone since early last year but hasn’t made headway in the wake of its nuclear test. The idea is being considered again now, however, as conditions became favorable following the Feb. 13 agreement,” the source said on condition of anonymity.

The source referred to a landmark six-party agreement in which North Korea promised to begin dismantling its nuclear programs in return for aid. The agreement, signed by the two Koreas, the U.S., China, Russia and Japan came four months after the North defiantly tested a nuclear weapon, prompting worldwide condemnation.

The economic zone is to specialize in such sectors as trade, distribution, light industries, tourism and finance, the source said.

In 2002, the North designated Sinuiju, a city bordering China, as a special economic zone, but the plan fell through after Beijing arrested its governor Yang Bin, a Chinese-Dutch entrepreneur, on bribery and kickback charges. Since then, the plan has been put on hold amid the North Korean nuclear standoff and China’s alleged opposition.

North Korea has been resorting to outside handouts since mid 1990s, when its state-controlled economy collapsed due to mismanagement and natural disasters.

Read the full story here:
N. Korea considering building special economic zone on two islands
Yonhap
3/23/2007

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Koreas to Resume Family Reunions

Thursday, March 15th, 2007

Korea Times
Lee Jin-woo
3/15/2007

South and North Korea on Thursday agreed to resume the reunions of families separated since the Korean War by the two sides’ heavily fortified border, this May, Seoul’s Red Cross said.

After ending a two-day working-level inter-Korean meeting in Kaesong, the Korean National Red Cross (KNRC) in Seoul announced each side will have 100 separated family members meet their long-lost relatives at Mt. Kumgang, a scenic resort, in North Korea between May 9 and 14.

The two sides confirmed the date and other details about the reunions over the telephone and through liaison officials at the truce village of Panmunjom, it said.

They will exchange the whereabouts of the people next month and will disclose the final list of participants on April 27, it said.

The agreement came about two weeks after the 20th inter-Korean ministerial talks in Pyongyang. During the four-day meeting, the two Koreas agreed to resume face-to-face family reunions in early May, but did not set a date.

Since the historic inter-Korean summit in June 2000, South and North Korea have held 14 rounds of face-to-face family reunions.

At the Kaesong meeting, both sides failed to narrow differences on a trial run of cross-border trains, said Yang Chang-seok, spokesman of the Ministry of Unification.

“There were differences on when to start the joint cooperation project with the light industry and natural underground resources. Both sides agreed to continue the dialogue in the near future,’’ he said.

During the Cabinet talks earlier this month, Seoul and Pyongyang also agreed to carry out the test-run in the first half of this year although no exact schedule was set.

Last May, Pyongyang unilaterally notified Seoul that it would postpone the test-run just a day before the scheduled date, May 25, under apparent pressure from its hard-line military.

The Stalinist state cited two reasons for canceling the run _ the lack of security guarantees on both sides and the “extremely confrontational” climate in the South.

The aborted test-runs also nullified an economic accord under which South Korea was supposed to provide raw materials in exchange for access to the North’s minerals deposits.

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South, North Korea fail to agree on trial run of cross-border trains

Thursday, March 15th, 2007

Yonhap
Kim Hyun
3/15/2007

South and North Korea on Thursday failed to agree on when to conduct their first run of cross-border railways in nearly 60 years over disputes on industrial aid to the North, the Unification Ministry said.

The two Koreas agreed, however, to resume family reunions in May, said the South’s Red Cross after separate negotiation.

Their two-day meeting in the North Korean border city of Kaesong ended without an agreement on the test run of two railways along the east and west coasts, said ministry spokesman Yang Chang-seok.

The talks were expected to hinge on how to guarantee the military security for the trains crossing the border, but the spokesman said disputes occurred on how arrange industrial aid to the North.

“There were differences on when to start the joint cooperation project with the light industry and natural underground resources, but they agreed to continue their dialogue in the near future,” Yang said.

South Korea has connected the test run to tens of millions of dollars’ worth of aid to North Korean light industries, such as clothing, shoes and soap manufacturing. In the talks in Kaesong, Seoul sought to focus on setting the date for the trial run and discussing the aid afterwards, while Pyongyang wanted to simultaneously handle the two issues, officials said.

As part of the watershed inter-Korean summit in 2000, the South laid tracks for two railways in 2005–one on the east coast and another on the west coast–which were severed during the 1950-1953 Korean War. The last train to cross the border ran in 1951 during the war, carrying refugees and soldiers.

The rail crossing planned for May of last year was scrapped at the last minute, as the North demanded a maritime border off the west coast to be redrawn as a precondition.

The North does not recognize the western sea border that was drawn by the United Nations and the United States and other allies at the end of the war.

The railway talks resumed after a ministerial-level agreement on March 2 that cleared the way for many inter-Korean projects, including the reunion of families separated from the war.

Through a separate dialogue channel, the two Koreas agreed on Thursday to hold family reunions on May 9-14, said the South Korean Red Cross in a press release. The reunions, the 15th of their kind, will take place at the North’s Mount Geumgang resort, the customary venue used for South Korean tourists, it said. The agreement followed dialogue with the Red Cross’s North Korean counterpart via telephone and in the truce village of Panmunjom.

Red Cross officials will exchange details on the whereabouts of families separated by the border in early April, and will reveal the final list of participants on April 27, it said. One hundred people each from the South and the North will participate, it said.

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