North Korean Economy Watch

In the article below, Dr. Lankov makes a compelling argument that the North Korean government is now attempting to to re-stalinize the economy because the system cannot survive liberal economic reforms.

Altough the trend seems depressing, optimists should take note that Pyongyang’s efforts to reassert control over the economy parallel a decline in belief in the official ideology.  With a deterioration of this ideology, people’s acquiescence to the DPRK’s political leaders declines, and power dynamics are all that hold the system together.  Efforts to control the general population are increasingly seen by the people as self-interested behavior on the part of their leaders, calling their legitimacy into question.

Additionally, efforts to reassert control over the economy are bound to fail because the system has already collapsed, their capital has been stripped, and there are insufficient funds to rescue the system.

In other words, efforts to re-stalinize the economy are bound to fail from both an economic and ideological perspective.

North Korea dragged back to the past
Asia Times
Andrei Lankov
1/24/2008

When people talk about North Korea these days, they tend to focus on the never-ending saga of the six-party talks and the country’s supposed de-nuclearization. Domestic changes in the North, often ignored or overlooked, should attract more attention.

These changes are considerable and should not encourage those optimists who spent years predicting that given favorable circumstances the North Korean regime would mend its ways and follow the beneficial development line of China and Vietnam. Alas, the recent trend is clear: the North Korean regime is maintaining its counter-offensive against market forces.

Merely five years ago things looked differently. The decade that followed Kim Il-sung’s death in 1994 was the time of unprecedented social disruption and economic disaster culminating in the Great Famine of 1996-99, with its 1 million dead. The old Stalinist economy of steel mills and coal mines collapsed once the Soviets discontinued the aid that alone kept it afloat in earlier decades.

All meaningful economic activity moved to the booming private markets. The food rationing system, once unique in its thoroughness and ubiquity, collapsed, and populace survived through market activities as well as the “second”, or non-official, economy. The explosive growth of official corruption meant that many old restrictions, including a ban on unauthorized domestic travel, were not enforced any more. Border control collapsed and a few hundred thousand refugees fled to China. In other words, the old Stalinist system imploded, and a new grassroots capitalism took over.

The regime, however, did not approve the changes – obviously on assumption that these trends would eventually undermine the government’s control. Authorities staged occasional crackdowns on market activities, though those crackdowns seldom had any lasting impact: people had to survive somehow, and officials were only too willing to ignore the deviations if they were paid sufficient bribes.

By 2002 it seemed as if the government itself decided to bow to the pressure. In July that year, the Industrial Management Improvement Measures (never called “reforms”, since the word has always been a term of abuse in Pyongyang’s official vocabulary) decriminalized much market activity and introduced some changes in the industrial management system – very moderate and somewhat akin to the half-hearted Soviet “reforms” of the 1960s and 1970s.

The 2002 measures were widely hailed overseas as a sign of welcome changes: many Pyongyang sympathizers, especially from among the South Korean Left, still believe that only pressure from the “US imperialists” prevents Kim Jong-il and his entourage from embracing Chinese-style reforms. In fact, the 2002 measures were not that revolutionary: with few exceptions, the government simply gave belated approval to activities that had been going on for years and which the regime could not eradicate (even though it had tried a number of times). Nonetheless, this was clearly a sign of government’s willingness to accept what it could not redo.

However, around 2004 observers began to notice signs of policy reversal: the regime began to crack down on the new, dangerously liberal, activities of its subjects. By 2005, it became clear: the government wanted to turn the clock back, restoring the system that existed before the collapse of the 1990s. In other words, Kim Jong-il’s government spent the recent three of four years attempting to re-Stalinize the country.

This policy might be ruinous economically, but politically it makes perfect sense. It seems that North Korean leaders believe that their system cannot survive major liberalization. They might be correct in their pessimism. The country faces a choice that is unknown to China or Vietnam, two model nations of the post-Communist reform. It is the existence of South Korea that creates the major difference.

Unlike China or Vietnam, North Korea borders a rich and free country that speaks the same language and shares the same culture. The people of China and Vietnam, though well aware of the West’s affluence, do not see it as directly relevant to their problems: the United States and Japan surely are rich, but they are also foreign so their experiences are not directly relevant. But for the North Koreans, the comparison with South Korea hurts. Even according conservative estimates, per capita gross national income in the South is 17 times the level it is in the North; to put things in comparison, just before the Germany’s unification, per capita GNI in West Germany was roughly double that in East Germany.

Were North Korea to reform, the disparities with South Korea would become only starker to its population. This might produce a grave political crisis, so the North Korean government seemingly believes that in order to stay in control it should avoid any tampering with the system. Maintaining the information blockade is of special importance, since access to the overseas information might easily show the North Koreans both the backwardness of their country and the ineptitude of their government.

At the same time, from around 2002 the amount of foreign aid began to increase. The South Korean government, following the so-called Sunshine policy, began to provide generous and essentially unmonitored aid to Pyongyang. China did this as well. Both countries cited humanitarian concerns, even though it seems that the major driving force was the desire to avoid a dramatic and perhaps violent collapse of the North Korean state.

Whatever the reasons, North Korea’s leaders came to assume that their neighbors’ aid would save the country from the worst of famine. They also assumed that this aid, being delivered more or less unconditionally, could be quietly diverted for distribution among the politically valuable parts of the population – such as the military or the police, and this would further increase regime’s internal security.

So, backward movement began. In October 2005, Pyongyang stated that the Public Distribution System would be fully re-started, and it outlawed the sale of grain on the market (the ban has not been thoroughly enforced, thanks to endemic police corruption). Soon afterwards, came regulations prohibited males from trading at markets: the activities should be left only to the women or handicapped. The message was clear: able-bodied people should now go back to where they belong, to the factories of the old-style Stalinist economy.

There have been crackdowns on mobiles phones, and the border control was stepped up. There have been efforts to re-enforce the old prohibition of unauthorized travel. In short, using newly available resources, North Korea’s leaders do not rush to reform themselves, but rather try to turn clock back, restoring the social structure of the 1980s.

The recent changes indicate that this policy continues. From December only sufficiently old ladies are allowed to trade: in order to sell goods at the market a woman has to be at least 50 years old. This means that young and middle-aged women are pushed back to the government factories. Unlike earlier ban on commercial activity on men, this might have grave social consequences: since the revival of the markets in the mid-1990s, women constituted the vast number of vendors, and in most cases it was their earnings that made a family’s survival possible while men still chose to attend the idle factories and other official workplaces.

Other measures aim at reducing opportunities for market trade. In December, the amount of grain that can be moved by an individual was limited to ten kilograms. To facilitate control, some markets were ordered to close all but one gate and make sure that fences are high enough to prevent scaling.

Vendors do what they can to counter these measures. One trick is to use a sufficiently old woman as a figurehead for a family business. The real work is done by a younger woman, usually daughter or daughter-in-law of the nominal vendor, but in case of a police check the actual vendor can always argue that she is merely helping her old mother. Another trick is to trade outside the marketplace, on the streets. This uncontrolled trade often attracts police crackdowns, so vendors avoid times when they can be seen by officials going to their offices.

This autumn in Pyongyang there was an attempt, the first of this kind in years, to prescribe maximum prices of items sold in markets. Large price tables were displayed, and vendors were forbidden to sell goods (largely fish) at an “excessive price”. It was also reported that new regulations limit to 15 the number of items to be sold at one stall.

The government does not forget about other kinds of commercial activities. In recent years, private inns, eateries, and even bus companies began to appear in large numbers. In many cases these companies are thinly disguised as “government enterprises” or, more frequently, as “joint ventures” (many North Korean entrepreneurs have relatives in China and can easily persuade them to pose as investors and sign necessary papers).

Recently a number of such businesses were closed down by police. People were told that the roots of evil capitalism had to be destroyed, so every North Korean can enjoy a happy life working at a proper factory for the common good.

Yet even as the government pushes people back to the state sector of the economy, These new restrictions have little to do with attempts to revive production. A majority of North Korean factories have effectively died and in many cases cannot be re-started without massive investment – which is unlikely to arrive; investors are not much interested in factories where technology and equipment has sometimes remained unchanged since the 1930s.

However, in North Korea the surveillance and indoctrination system has always been centered around work units. Society used to operate on the assumption that every adult Korean male (and most females as well) had a “proper” job with some state-run facility. So, people are now sent back not so much to the production lines than to indoctrination sessions and the watchful eyes of police informers, and away from subversive rumors and dangerous temptations of the marketplace.

At the same time, border security has been stepped up. This has led to a dramatic decline in numbers of North Korean refugees crossing to China (from some 200,000 in 2000 to merely 30,000-40,000 at present). The authorities have said they will treat the border-crossers with greater severity, reviving the harsh approach that was quietly abandoned around 1996. In the 1970s and 1980s under Kim Il-sung, any North Korean trying to cross to China or who was extradited by the Chinese police would be sent to prison for few years.

More recently, the majority of caught border-crossers spent only few weeks in detention. The government says such leniency will soon end. Obviously, this combination of threats, improved surveillance and tighter border control has been effective.

The government is also trying to restore its control of information. Police recently raided and closed a number of video shops and karaoke clubs. Authorities are worried that these outlets can be used to propagate foreign (especially South Korean) pop culture. Selling, copying and watching South Korean video tapes or DVDs remain a serious crime, even though such “subversive materials” still can be obtained easily.

It is clear that North Korean leaders, seeking to resume control that slipped from them in the 1990s and early 2000s, are not concerned if the new measures damage the economy or people’s living standards when set against the threat to their own political domination and perhaps even their own physical survival.

Manifold obstacles nevertheless stand in the way of a revival of North Korean Stalinism.

First, large investment is needed to restart the economy and also – an important if underestimated factor – a sufficient number of true believers ready to make a sacrifice for the ideal. When the North Korean regime was developed in the 1940s and 1950s it had Soviet grants, an economic base left from the days of Japanese investment and a number of devoted zealots. The regime now has none of these. Foreign aid is barely enough to feed the population, and the country’s bureaucrats are extremely cynical about the official ideology.

Second, North Korea society is much changed. Common people have learned that they can survive without relying on rations and giveaways from the government. It will be a gross oversimplification to believe that all North Koreans prefer the relative freedoms of recent years to the grotesquely regimented but stable and predictable existence of the bygone era, but it seems that socially active people do feel that way and do not want to go back. Endemic corruption also constitutes a major obstacle: officials will be willing to ignore all regulations if they see a chance to enrich themselves.

It is telling that government could not carry out its 2005 promise to fully restart the public distribution (rationing) system. Now full rations are given only to residents of major cities while others receive reduced rations that are below the survival level. A related attempt to ban trade in grain at markets also failed: both popular pressure and police inclination to take bribes undermined the policy, so that grain is still traded openly at markets.

Even so, whether the government will succeed in re-Stalinizing society, its true intent remains the revival of the old system. North Korean leaders do not want reforms, assuming that these reforms will undermine their power. They are probably correct in this assumption.

Daily NK
Yang Jung A
1/25/2008
 
A job in a factory at the Kaesong Industrial Complex is fast becoming the ideal job for North Korean citizens, and positive feelings toward the South are continuing to grow.

Good Friends reported on the 23rd that most North Koreans are aware that economic cooperation at Kaesong is thriving as South Korean enterprises supply advanced materials and management, and North Korea supplies labor.

“South Korean advisory managers supervise workers. If workers do not come to work on time in the morning or they do not work diligently, the managers simply say, ‘You don’t need to come here tomorrow’” reported one North Korean citizen through Good Friends.

The citizen added, “Workers try to complete their appointed tasks under all conditions, while monitoring the South Korean supervisors’ attitudes.”

As the Kaesong Complex grows, the internal customs procedures into Kaesong become more complicated.

Good Friends reported, “Kaesong was originally a strictly controlled zone because of its location just north of the 38th parallel. If a North Korean wanted to visit Kaesong, they had to register, undergo an investigation and get a pass. Now, If they try to go to Kaesong, the process is much more complicated.”

A cadre working at the Kaesong Complex said that this is because people have growing positive feelings toward South Korea. The authorities worry about the great gap between the North and the South and worry about growing public disillusionment.”

He added, “The only place people can talk about South Korea is at Kaesong. They have a yearning for South Korea, especially after they’ve encountered South Korean products.” 

Daily NK
Moon Sung Hwee
1/21/2008

Tens of thousands of a Shock Brigade (state construction workers) of North Korea are forced to build roads under minus 20 degree Celsius weather to prepare for Kim Jong Il’s unforeseen visit to the area, an inside source told the Daily NK.

The informer said, on the 3rd of January, “Since mid December, thirty thousands of Shock Brigade for the Propaganda of the Party Ideology (shortly June 18 Shock Brigade) had been poured into building road in Samsoo, Yangkang Province.”

He added that the Shock Brigade was connecting road between Wangduk Station in Hyesan (exclusively for Kim Jong Il) and Samsoo Power Plant. Kim Jong-Il was rumored for planning on surprise visit to the power plant. The road would be 22 km in length.

There was actually a road built in 2003 between Wangduk and Samsoo Power Plant. However, the road was ordered to be renovated due to Kim Jong Il’s dissatisfactory remark on it in his March 2006 visit to the area.

During the 2003 road construction, the Hyesan city government mobilized tens of thousands of residents plus June 18 Shock Brigade to finish it on time. Nevertheless, as Kim Jong Il showed discontent, Yangkang Provincial party officials and June 18 Shock Brigade officers were criticized harshly.

The problem was that the road was through downtown Hyesan, and a section of it was to meandering, thus dangerous to protect “the Comrade General.”

“After that, June 18 Shock Brigade, who just finished constructing Hyesan-Dancheon road, were reinforced and put to refurbish the Kim Jong Il’s private road,” the informant added.

The road currently under construction is to connect Wangduk and Samsoo Power Plant while circumventing populated area of Hyesan. And, of course, since the road is built as a “Number 1 Road,” it is solely for Kim Jong Il’s use, not even for party officials let alone ordinary people.

According to the informant, condition of road construction is harsh. Workers of the Shock Brigade are forced to work in bitter cold. When asked about disgruntlement of the workers, the informant replied, “This sort of hardship happens every time the General visits a certain area. Who can argue with the General’s order?”

Institute for Far Eastern Studies (IFES)
NK Brief No. 08-1-10-1
1/10/2008

The net worth of inter-Korean exchanges totaled 1,797,890,000 USD in 2007, up 33% from the 1.35 billion USD in the previous year. Exchanges between the two Koreas began in 1989, and topped one billion dollars for the first time in 2005. The almost 1.8 billion dollars in trade recorded in 2007 is the highest to date, and is equal to 65 percent of North Korea’s non-Korean trade volume of 2.996 billion USD in 2006.

Inter-Korean commercial trade was worth 1,431,170,000 USD, 54 percent higher than the 928 million USD in 2006, while non-commercial trade fell 13 percent, from 421,660,000 dollars in 2006 to only 366,720,000 dollars last year. Overall, commercial trade made up over 80 percent of cross-border exchanges, proving that inter-Korean exchanges continue to grow based on commercial transactions. Commercial trade growth was centered around the mining and fishery sectors (52 percent) and increased production in the Kaesong Industrial Complex (48 percent). Textiles and other goods processed on commission also grew by 30 percent.

Additional manufacturing by companies entering the KIC, as well as the installment of equipment used to increase output by those manufacturers already established in the first phase of the complex, saw a great jump last year. Additionally, South Korea loaned the North 80 million USD for equipment, cloth, soap, polyester fibers, synthetic leather, and other materials to be used in light industry, while the North repayed 2.4 million USD (3 percent) of the loan by delivering 1,000 tons of zinc. This was the first example of the North repaying funds to the South, and shows opportunities for the two Koreas to fulfill each other’s needs and carry out friendly economic cooperation in the future.

With increases in domestic use and export of Bukhan Mountain’s minerals and timber, improvements in communications, customs, and transport issues at the KIC and a growing number of companies moving into the complex leading to an increase in production and manufacturing activity, inter-Korean exchanges are expected to continue to grow in the future.

Korea Herald
12/19/2007

Czech authorities have stopped extending visas of North Korean laborers in conformity with U.N. sanctions against Pyongyang and all will probably leave by year’s end, officials were quoted as saying by Associated Press.

Czech authorities stopped renewing residency permits for North Korean workers on Jan. 25 in line with U.N. Security Council Resolution 1718 adopted in October 2006 and laborers have gradually left since then, the Interior Ministry said in a statement.

The sanctions are aimed at punishing North Korea for carrying out its first nuclear test, on Oct. 9, 2006 _ a test that prompted international condemnation.

Among other things, the resolution allows cargo to and from North Korea to be stopped and inspected for prohibited goods, bans the import and export of certain military material, and freezes the assets of, and bans travel by, individuals and companies involved in the country’s programs to produce weapons of mass destruction.

On average, several hundred North Korean laborers have been working in various clothing and shoe factories in the Czech Republic since 2001, the ministry said.

The laborers have been leaving the country as their visas expired and all were expected to be gone by the end of the year, said Katerina Jirgesova, a spokeswoman for the Czech foreign police.

While 331 North Korean workers were still in the country in May, only 134 remained on Nov. 27, she said. Police have investigated allegations that the workers were used as a source of revenue for the North Korean government, she said, but she added adding that no wrongdoing could be determined. The allegations reportedly were made by a former North Korean diplomat and a major Czech labor organization.

None of the workers applied for asylum in the Czech Republic, she said.

There do not appear to be many North Korean laborers in other parts of Europe. The Italian labor ministry said it did not have a program of this nature. Officials in Portugal and the Netherlands said there were no North Koreans employed in their countries.

The most authoritative map of North Korea on Google Earth
North Korea Uncovered v.7
Download it here

This map covers North Korea’s agriculture, aviation, cultural locations, manufacturing facilities, railroad, energy infrastructure, politics, sports venues, military establishments, religious facilities, leisure destinations, and national parks. It is continually expanding and undergoing revisions. This is the sixth version.

Additions to the latest version of “North Korea Uncovered” include: A Korean War folder featuring overlays of US attacks on the Sui Ho Dam, Yalu Bridge, and Nakwon Munitians Plant (before/after), plus other locations such as the Hoeryong Revolutionary Site, Ponghwa Revolutionary Site, Taechon reactor (overlay), Pyongyang Railway Museum, Kwangmyong Salt Works, Woljong Temple, Sansong Revolutionary Site, Jongbansan Fort and park, Jangsan Cape, Yongbyon House of Culture, Chongsokjong, Lake Yonpung, Nortern Limit Line (NLL), Sinuiju Old Fort Walls, Pyongyang open air market, and confirmed Pyongyang Intranet nodes.

Disclaimer: I cannot vouch for the authenticity of many locations since I have not seen or been to them, but great efforts have been made to check for authenticity. These efforts include pouring over books, maps, conducting interviews, and keeping up with other peoples’ discoveries. In many cases, I have posted sources, though not for all. This is a thorough compilation of lots of material, but I will leave it up to the reader to make up their own minds as to what they see. I cannot catch everything and I welcome contributions.

Daily NK
Jung Kwon Ho
12/11/2007

Several sources in China have relayed that it is rumored North Korean authorities are planning to take extreme measures to prevent the sale of industrial products at the jangmadang (markets) next year.

One Chinese merchant, whom DailyNK met in Dandong, China on the 6th, said, “Rumors are circulating that a measure preventing all kinds of Industrial products from being sold in the jangmadang will be implemented next year, making Chinese merchants involved in trade between North Korea and China nervous.”

He informed that “In place of industrial products, only farm produce from the fields of homeowners will be allowed to sell in the jangmadang. Marine products that up to now have been selling in the jangmadang will only be made available at appointed marine shops, meat products at food shops, and industrial products at state operated stores.”

The Chinese source also maintained that, “There are quite a few overseas Chinese who, not knowing what will happen, have bought loads of industrial products with the idea that this might be their last chance, and they have brought them into the North.”

The North Korean authorities began unfolding a series of market regulations immediately following the Inter-Korea Summit in October. These included such policies as limiting the types of items for sale and imposing a minimum age limit on female merchants. However, limiting the sale of industrial products themselves, after having abolished permanent markets, can be seen as a means of returning to “agricultural markets,” where farmers traded only vegetables and a surplus of produce.

According to other Chinese merchants with whom DailyNK met in Dandong on the 3rd, “Under the name of the North Pyongan Party Committee in Shinuiju, a three-day meeting was held between the Secretaries of the Party and of the Army and enterprise managers, from November 20th to the 22nd.”

They informed that “The meeting was held to discuss whether to prohibit jangmadang operations and put people who have been trading in the market to work at enterprises or factories, since regular provisions will resume starting next year.”

The recent efforts to regulate the markets have been analyzed as means to revert the standard of societal regulation to that of the pre-90s by restoring the provision system and normalizing factory operations. However, such an extreme measure is likely to give rise to serious civilian opposition, so there are doubts as to whether or not it can be realized.

The North Korean civilians, before the mid-90s, relied on a complete provision system supplied by the State, which included the provision of goods such as soap, clothes and other necessities. However, after the food shortage, the national provision system completely collapsed. As a result, civilians began acquiring most necessities, goods and food items through the jangmadang.

However, agricultural markets, where miscellaneous cereals, vegetables and other agricultural items raised in home gardens were traded, existed around the time when North Korea’s provision system was in normal operation.

Following the execution of the “July 1st Economic Management Improvement Measure” of 2002, the North Korean government established general markets which brought simple agricultural markets out in the open in February 2003. Since then, individuals leasing stands from the city mercantile department have been able to sell all kinds of industrial products as well.

One source in Chongjin stated in a phone conversation on the 6th regarding the recent rumors, “If the sources are Chinese merchants, than the rumor is not likely groundless. A majority of citizens sustain their livelihoods through the jangmadang.”

He agreed that “It is highly feasible that measures to toughen the regulation of industrial products in the market will be executed.”

Daily NK
Lee Sung Jin
12/11/2007

The number of day labor jobs offered by private parties is gradually increasing in the North. Unlike those with full time jobs at State-run factories, individuals with day labor jobs work by the day.

According to inside sources and many defectors who came to the South earlier this year, individuals looking for day labor jobs normally work as gold miners, construction workers in cities, as luggage carriers for train passengers and maids.

In North Korea, these day laborers are called “Bulbulee (which means a person sweats for labor),” “Sakbari (which means a person waiting for wages)” or “Ilkkun (workers).” It is reported that there are day labor hiring centers in big cities and around the closed mining areas.

Daily laborers’ wages vary based on the type of work. Laborers working at gold mines are provided with housing and food and get paid 1,500 North Korean won per day. In the city construction sites, skilled laborers such as plasterers earn 2,000 won daily whereas unskilled laborers make less than 1,000 won. Daily laborers are making good money compared to factory workers whose average monthly wages fall between 3,000 and 5,000 won.

Kim Yong Chul (pseudonym), a defector who used to work as a day laborer at a mine in Hoichang of South Pyongan Province said, “Since 2004, day labor hiring centers started to appear in the jangmadang (market) of Hoichang. Employers hired young men and women in good health on the spot and took them to workplaces.” He used to work at a mine well-known across the country since the Japanese colonial period. Mr. Kim said, “Day laborers not only dug for gold but were also mobilized to build or fix houses for their employers.”

In Hoichang, there are some gold mines closed by the authorities that were thought to be tapped out. In the mid 1990s, some locals dug the mines again and made a great fortune. Years later, around 2003, these locals began looking out for workers and started hiring individuals from other provinces. Now the county has a great number of day laborers from various provinces working at mines.

Good Friends, the Seoul-based relief organization dedicated to North Korea, said in a recent report, “On October 23rd at around 10 A.M., a gold mine in Hoichang of South Pyongan Province collapsed, leaving three miners dead and two wounded.” In the North, private parties are banned from trading gold and pine mushrooms by law, and only the State can make these types of transactions. However, it is well known that many officials in charge of enforcing the ban frequently take bribes and allow those who pay them to dig for gold in closed mines.

Gold miners usually stay underground between 15 to 30 days each time they begin a mining operation. The miners dig up the ore, crush it using a machine called a Maguanggi (ore-polishing machine) and apply mercury to extract gold. The whole process is done in underground tunnels, and the processed gold is sold to gold dealers in Pyongsung and Sinuiju.

Individuals who run the crushing machine are laborers from other provinces, and most of them are females. With food and housing provided by their employer, they make 1,000 won daily. If they work year-round this way, they can earn decent money.

45-year-old Park Jong Moo (pseudonym) who came to the South this year said, “I earned 2,000 won per day when I worked as a plasterer, building a house for a man who made his money from trade in Chongjin City.”

Mr. Park’s son worked as a cargo porter at the Chongjin railway station. Since there were so many “Sakbari (referring to cargo porters working for daily wages)” at the station, competition among “Sakbari” was fierce. Normally, these porters made less than 1,000 won per day.

It is becoming popular among party cadres and the new wealth to have a maid who does housework and takes care of children. These people introduce the maid to their neighbors as a ‘distant relative’ because having a maid is unthinkable in the Socialist North. While performing maid services and getting paid for the work that she does, the maid pretends to be a family member and acts as if she is merely helping out with the housework.

A source inside the North said, “There was once a party official in Chongjin who employed a girl as a maid after having paid her parents. When the official was accused of having a maid, the official said she was a ‘relative.’”

Regarding the rise in day laborers, an expert on North Korea says, “Those North Koreans who made a fortune from mining or trade privately employ laborers to further expand their businesses…However, since the regime will never allow the rich to become too powerful, it will begin to regulate the employment activities of private parties at the proper time.”

Korea Times
Jung Sung-ki
12/11/2007

The first regular freight service for over half a century began Tuesday operating across the heavily fortified border between South and North Korea.

The daily freight service is the first tangible result of an inter-Korean summit in October between President Roh Moo-hyun and North Korean leader Kim Jong-il. The two leaders agreed on a package of cross-border economic cooperation projects including the train operation.

The last regular rail operation was in 1951, a year after the three-year Korean War broke out.

The freight service, agreed upon at the inter-Korean prime ministers’ talks last month, will connect South Korea with the joint industrial complex in Gaeseong, in the North.

Earlier this month, the militaries of both Koreas signed a written security guarantee for the cross-border service at working-level talks in the truce village of Panmunjeom, clearing a major hurdle for the agreement.

The new service is expected to slash the cost of transporting products to and from the business complex, just north of the border, considered a major achievement of Seoul’s “sunshine” policy of engaging the North over the past decade.

Several South Korean firms are operating in the economic zone, dubbed a testing ground for mixing South Korean capitalism and technology with North Korea’s cheap labor.

Previously, trucks moved raw materials and finished goods back and forth across the border.

South Korean officials hope the cargo train service will lay the groundwork for a regular train service for passengers and the railway will be linked through North Korea to the Trans-China and Trans-Siberian railroads.

A 12-car train carrying curbstones and other construction materials left left South Korea’s Dorasan Station at 8:20 a.m. and arrived at North Korea’s Panmun Station 20 minutes later. A joint ceremony was held at the North Korean station around 11 a.m. with the attendance of some 180 officials from both Koreas.

The train returned to the South later in the day with goods including shoes, clothes and watches made at the industrial complex.

“We are reconnecting the last vein that has been severed for 56 years,” Lee Chul, president of the Korea Railroad, told reporters at Dorasan Station. “This looks like a humble start, but I hope this link will serve as a stepping stone for the inter-Korean railways to be connected to Europe through the Trans-Siberian railway.”

Lee also expressed hope that South and North Koreans could travel together vial rail to Beijing to cheer for next year’s Summer Olympics.

Trains will run daily on weekdays from Dorasan Station in Munsan to Panmun, carrying up to 10,000 tons of cargo on each run. The train service begins at 9 a.m. and returns from the North Korean station at 2 p.m. Trains are restricted to a maximum speed of 60 kilometers per hour when traversing the closely guarded frontier.

The original agreement was to connect a 25 kilometer section of track from Munsan to Bondgong in the North, next to the industrial complex, but the plan was modified because of the lack of loading facilities at Bongdong Station, according to Unification Ministry officials.

In May, two trains crossed the border on two reconnected tracks on the western and eastern sides of the peninsula in a one-off test run.

The two Koreas are technically still at war since the 1950-53 Korean War ended in a truce, not a peace treaty.

Korea Times
Ryu Jin
12/11/2007

Namkwang Engineering & Construction, a South Korean company which has recently been stepping up efforts for inter-Korean economic projects, plans to form a joint venture with a North Korean firm for construction works in the North and other countries.

Namkwang E&C CEO Lee Dong-chul told reporters Tuesday that his company, along with 516 Construction Company in the North, will seek to win construction orders in foreign countries including Angola as well as North Korean cities such as Gaeseong and Pyongyang.

“We signed a memorandum of understanding (MOU) for joint projects with the North Korean firm late last month,’’ he said in a press meeting. “They could be operated in the form of a joint venture, depending on the final agreement to be signed early next year.’’

Lee added that Namkwang would largely provide capital and construction technologies to the proposed joint-venture company while the North Korean firm would supply labor.

Founded about 50 years ago, 516 Construction Company is the only construction firm in the North Korean border city of Gaeseong where an inter-Korean industrial complex is located. It has constructed apartments in the city with more than 3,000 workers.

“Currently, the firm is building a steel-frame factory in the Gaeseong Industrial Complex including reinforced concrete, tiles and plaster work under a contract with us,’’ Lee said. “Maybe we can take part in construction works in Angola and Libya jointly.’’

Namkwang, which recently got government approval for cross-border projects, has invested some 7.6 billion won ($8.23 million) since October to build the steel-frame factory which would be used for the second-phase construction of the Gaeseong Industrial Complex.

Lee said that his company would also redouble efforts to get more orders for overseas construction in such countries as Angola, Libya and Vietnam next year. Namkwang has received orders worth $1.1 billion along with NIEC, a joint venture in Angola, since 2005.

Established in 1947, Namkwang has carried out a lot of large-scale projects in South Korea and also advanced to foreign countries such as Saudi Arabia, Iraq and the Philippines for construction of buildings, roads, dams and harbors on the back of its unique technology.