North Korean Economy Watch

The most authoritative map of North Korea on Google Earth
North Korea Uncovered: Version 6
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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 newest version of North Korea Uncovered include: Alleged Syrian nuclear site (before and after bombing), Majon beach resort, electricity grid expansion, Runga Island in Pyongyang, Mt. Ryongak, Yongbyon historical fort walls, Suyang Fort walls and waterfall in Haeju, Kaechon-Lake Taesong water project, Paekma-Cholsan waterway, Yachts (3), and Hyesan Youth Copper Mine.

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
Yang Jung A
11/7/2007

Although the North Korean economy has been growing since late 1990s, it is hard to say that the economy has growth on its own.

A senior researcher at the Korea Institute for National Unification, Choi Su Young, released a paper titled “the Latest Tendency of the North Korean Economy” in the October “Finance,” which is issued by Korea Federation of Banks. He pointed out in the paper that “North Korea’s economic reliance on China is getting serious and cited the state’s 1.7 billion dollars in trade with China.”

He explained “On one hand, North Korea exports to China in 2006 increased to 72.7% compared with exports in 2002; on the other hand, imports from China increased to 163.8%. This resulted in a recorded deficit of 760 million dollars. The rate of North Korean trade reliance on China was 48.5% in 2004, and it reached 60% last year.”

He relayed that “In the production industry, North Korea has to rely systematically on China’s raw materials, energy, facilities and parts. North Korea is importing its entire amount of petroleum for transportation and production. Chinese influence on the North Korean economy is so absolute that 70-80% of consumer products are made in China.

Mr. Choi insists that “Although foreign aid and South-North economic cooperation were expanding and its reliance on the influx of foreign currency was great, North Korea was staying in low-growth status, which means North Korea does not have the economic foundation for development.

According to the report, the scale of exchange between the South and the North was rapidly increasing through the annual provision of South Korean rice and free fertilizer supporting and South Korean enterprises’ activities at the Kaesung Industrial Complex.

With the exception of South Korea and China, there are no countries willing to invest in North Korea. Most developed countries turn away from North Korea because the standard and environment related to North Korean investment are significantly inferior to the norm.

He explained that “The North Korean investment environment is inconvenient for foreign investors due to obsolete infra-structures, high distribution costs and limited markets. It is unnecessary to mention the international policies related to North Korea.”

Mr. Choi added that “The scale of North Korean foreign trade was 2 billion dollars in 2000 and reached 3 billion dollars in 2006. Exports amounted to 950 million dollars and imports came to a total of 2.05 billion dollars.”

Poultry company looks North for land, workers
Joong Ang Daily
11/7/2007

A South Korean food company said yesterday it will start building a chicken farm in North Korea later this year as part of its efforts to produce chickens using the North’s cheap labor.

Maniker Company, the nation’s second-largest chicken processing company, said it agreed with North Korean officials last month to establish the farm in Kaesong, where an inter-Korean industrial complex is located.

“Construction will start later this year and the farm will be operational early next year,” said Choi Young-sam, a spokesman for Maniker, by telephone.

North Korea will provide the site and workers for the construction, Choi said, adding the project is partly supported by the South Korean government.

The agreement was reached at a meeting in Pyongyang when two executives of Maniker visited the North in late October, the spokesman said.

Details such as how much money Maniker and the South Korean government will spend on the chicken farm have yet to be fixed, Choi said.

In the Kaesong Industrial Complex, located 70 kilometers north of Seoul, 26 South Korean companies employ about 16,000 North Korean workers who produce garments, kitchenware and a number of other goods.

North, South Korea collaborate on strategy to end food shortage
Courier News (Via DPRK Forum)
11/6/2007

North Korea and South Korea have decided to start a jointly operated hog farm in the North’s capital to help alleviate the communist nation’s chronic food shortages, a South Korean official said Tuesday.

The agreement came as a follow-up to a wide range of accords reached by the leaders of the two Koreas last month.

The farm will run for a two-year trial period in Pyongyang and aim to breed 5,000 hogs, with the South providing the animals, feed, equipment and building materials, and the North providing the land, electricity, water and labor, South Korea’s Unification Ministry said.

Officials of the two countries negotiated the deal in talks in the North Korean border city of Kaesong on Monday and plan to meet again to map out details, such as when to open the farm, ministry spokesman Park Won-jae said in Seoul.

“The hogs are aimed at resolving the North’s food shortage problem,” Park said, adding that the animals would not be exported to South Korea or elsewhere.

North Korea suffers from chronic food shortages and has struggled to increase its grain production in recent years. The country was hit by famine in the mid-1990s that killed an estimated 2 million people.

In the second-ever inter-Korean summit in Pyongyang in early October, South Korean President Roh Moo-hyun and North Korean leader Kim Jong Il agreed on accords aimed at easing tensions and boosting cross-border economic exchange programs. The measures included the launch of cooperative farm programs.

The two Koreas are still technically at war, as their 1950-53 Korean War ended with an armistice, not a peace treaty.

Daily NK
Moon Sung Hwee
11/1/2007

A source familiar with issues inside North Korea said on the 30th, “Most of the underground tunnel of Hyesan Youth Mine in Yangkang Province is now under water.” The source added, “Ever since Samsoo Hydroelectric Power Station started filling up the dam last year, the mine began to flood, and now it can not operate properly.”

Hyesan mine produces 80 percent of the country’s copper. North Korea expects that the mine could produce copper for the next forty years. Hebeisheng-Luanhe Industry in China once attempted to buy 51 percent shares of the Hyesan Youth Mine. However, this was unsuccessful due to opposition from North Korea’s second Economic Commission, which manages the military economy.

North Korea began the construction of Samsoo Hydroelectric Power Station in February of 2004, mobilizing thirty thousand troops of the so-called “Shock Brigade for the Propaganda of the Party Ideology” every year. Unfortunately, Samsoo Power Plant became the major cause of the flooding of Hyesan Mine.

If this mine is inundated with water, North Korea has to import huge amounts of copper. It was the Propaganda and Agitation Department that led the construction of Samsoo Power Plant, which generates 50,000 kilowatts of power and is now causing the flooding. It is absurd that North Korea is about to lose its principal copper mine because of Samsoo Power Plant, a facility that was primarily constructed for political purposes.

Jung You Sim (37, pseudonym), a defector from Hyesan who came to South Korea in July of this year, stated that “Hyesan Mine is almost abandoned. It takes about three years to fill up the Samsoo Dam with water. Even now, there is difficulty in pumping out the water leaked from the power plant. Once the dam is completely filled, the total volume of water will be 1,300 million cubic meters. By then, the water pressure will have made it impossible to pump out the water that has infiltrated the mine. North Korea must choose either Samsoo Power Plant or Hyesan Mine.”

Samsoo Power Plant was constructed in Jangan-ri of Hyesan, Yangkang Province; Hyesan Mine is located nearby in Masan-dong.

The construction of Samsoo Power Plant which began in February 2004 evoked a great deal of controversy from the beginning. The Guidance Department of the Party and the Ministry of Extractive Industries opposed the construction citing the high risk of flooding in the Hyesan Mine.

However, Jeong Ha Cheol, then Secretary of Propaganda and Agitation Department and Choi Choon Hwang, then vice director of the Central Committee of the Party pushed hard for the construction with the aim of boosting their political standing and succeeded in obtaining Kim Jong Il’s approval. It is almost certain that both men have been purged.

At that time, the Propaganda and Agitation Department reported that the water leakage could be prevented if the bottom of the power plant dam is pressed hard and cemented with mud about three meters deep. However, experts from France who inspected the area opposed the construction because the land itself was calcareous and unstable. The water leakage was inevitable.

First explored in the 1960s, Hyesan Mine produces 10,000 tons of copper concentrates annually. When Gapsan Dongjum Mine, explored during the Japanese colonial period, was finally depleted and closed in 1990, Hyesan Mine became the lifeline of the nation’s copper production. It flooded before in the mid 1990s but was restored shortly thereafter.

At that time, the mine flooded because the pumping device stopped operating due to the lack of electricity across the country. Although the workers at the mine did their best to pump the water, they could not stop the water flowing into the mine at a speed of 480㎥/hour. In January, 1997, Hyesan Mine flooded again, as did other mines throughout the country, and lost all mining facilities.

The workers faced insurmountable obstacles in trying to save the mine. This was because some workers at Hyesan mine had removed the copper from pumping devices and had smuggled it to China before the flood hit the country.

When the officials from the Ministry of Extractive Industries visited Hyesan Mine in 1999, they informed the local cadres that the mine’s copper production had become insufficient for the manufacture of military supplies, and as a result, copper would have to be imported from Chile.

Defectors coming from Yangkang Province said that when Kim Jong Il paid a visit to the mine in October, 1998 and received the report on the difficulties in the mine’s operation, he said, “We must save the mine at any cost. I will supply the money.” At once, the chief secretary of Yangkang Province and the Ministry of Extractive Industries took charge of restoring the mine and organized the recovery workforce.

Kim Jong Il provided the so-called “Revolutionary Fund” for the mine’s recovery. He sent $ 3.8 million in 1998 and $2.6 million in 2001, paid all in cash. In 1998 when a great number of people were starving to death, corn was available in China for $ 137 per ton. The amount of money spent on the mine’s recovery could have been used to purchase approximately 28,000 tons of corn. In those days, the local residents in Yangkang Province were made to listen to lectures about the ‘General’s Revolutionary Fund’ over and over.

Upon the order for recovery, residents in Masan 1-dong and 2-dong in Hyesan city were mobilized every weekend to dig out the dirt in the mine. By May 1, 2003, the locals had dug to a depth of 710 m. Later that year, the mine produced 1,500 tons of copper concentrates, and in 2004 it produced 3000 tons.

The local people made huge sacrifices to recover Hyesan mine, and the recovery cost about $ 7 million. However, it was all in vain. The mine is now again flooded due to the construction of Samsoo Power Plant. Hyesan defector Jung Yoon Sim said that Kim Jong Il later changed his tone when he visited Yangkang Province and heard about the recent flooding, saying “it was anticipated.”

Samsoo Power Plant can produce up to 50,000 kilowatts of power. However, about 60,000 kilowatts of power are needed to supply electricity to the apartment complexes constructed in 2003 in Samjiyun county of Yangkang Province.

After all was said and done, Kim Jong Il had mobilized 30,000 people for three and a half years and had them work 14 hours per day while providing a mere 580 grams of grain daily in an attempt to build a power plant that generates only 50,000 kilowatts. In doing so, he destroyed the nation’s leading copper production center.

President Roh praised such an incompetent and irresponsible man as “a charismatic leader who has a deep understanding about the affairs of the country and has faith in the system.”

Yonhap
10/31/2007

Union leaders of Hyundai Motor Co., South Korea’s largest carmaker, left for North Korea to attend a ceremony to mark the completion of a corn noodle plant in the North’s capital, union officials said Wednesday.

Hyundai’s 44,000-strong union has donated 500 million won (US$553,800), collected from unionized workers for a mere $13 each, to help a South Korean humanitarian group build the noodle factory in the impoverished North.

Yonhap
10/26/2007

North Koreans have been suffering from chronic job shortages due to worsening economic conditions and a recent move by North Korean authorities to limit the number of hawkers for fear of capitalism spreading in the isolated, communist state, an aid group said Friday.

The North has recently forbidden women under the age of 40 from selling merchandise on their own, Good Friends said in its latest newsletter. The previous age limit was 30.

Institute for Far Eastern Studies
NK Brief No. 07-10-23-1
10/23/2007

DPRK authorities are quick to stress that not one single unemployed worker can be found in Socialist North Korea. The truth is, however, unemployment has existed in the past, and now out-of-work laborers are taking on a new form.

With the exception of a small minority of North Koreans, most citizens are assigned professions and dispatched to their place of employment by DPRK authorities with no regard to personal aptitude or skills. This has led to the refusal of some to take assignments in mines, shipyards, and other undesirable factories, creating a group of ‘non-workers’.

However, today’s unemployed are different from the unemployed found in the 1980s and 90s. In the past, these workers refused positions at undesirable factories. In the late 1990s, with the cessation of food rations and lack of job positions, a good number of factories and businesses shut down operations, leading to an increase in unemployment. Now, it is the mines, companies, and yards that are refusing to take on new workers.

Currently, North Korean authorities are tasking managers of organizations and companies with the responsibility of feeding employees. Anyone with the skills and the money can become a manager. Authorities assess whether someone can provide wages and rations for employees, and if so, will put them in charge. However, the order that “Managers not able to carry out the task of feeding [employees] will be released or demoted” has been passed down, putting a considerable burden on executives and managers. As they are now responsible for both the wages and the rations of their employees, these managers are not looking to take on new workers. This is problematic for those dismissed from military service with little or no trade skill, and for those receiving only a middle-school education, especially women. These citizens are turning to trade to provide a living.

Yonhap
Lee Joon-seung
10/23/2007

A newly opened factory-apartment at the Kaesong Industrial Complex promises fresh possibilities for inter-Korean business cooperation, the developer of the facility said Tuesday.

The state-run Korea Industrial Complex Corp. (KICOX) said the dual-purpose manufacturing and residential facility is specifically designed for small and medium enterprises (SMEs) that are currently being phased out of South Korea due to the lack of workers and high labor costs.

At the formal opening ceremony of the factory-apartment, KICOX President Kim Chil-doo said, “The new facility provides an ideal business model for South Korea’s labor-intensive SMEs trying to stay afloat, and is an ideal means to start off business in North Korea.” About 300 people from South Korea were present at Tuesday’s opening in Kaesong, including lawmakers and Vice Industry Minister Oh Young-ho.

The 32 companies that will use the new facility are generally small clothing companies that were at the critical juncture of deciding whether to move to China and Southeast Asian countries, or close their businesses altogether. The factory-apartment provides an alternative means to continue making goods and is beneficial to all sides, the developer said.

By moving to Kaesong, the companies can stay in business by hiring workers for about US$60 a month, while 2,700 North Korean workers benefit from new jobs. In addition, the dual arrangement permits cheaper operating costs, a better working environment and allows companies to cooperate with each other for logistics support, said the developer.

The corporation, which runs 11 similar factory-apartments in South Korea, said the five-story building covers 27,880 square meters and was built in 14 months at the expense of 21.1 billion won (US$22.8 million). It is equipped with a storage area, a training center, a product display room, two dining halls, a store and fitness center. The new building is equipped with 71 dormitories for South Korean workers and various support staff.

The monthly rent in the factory-apartments is 4,500 won (US$4.9) per square meter, and there are six different floor arrangements available, ranging from 396 to 1983 square meters.

KICOX said that based on the projected success of the first factory-apartment, up to seven more will be built in Kaesong by 2010. It said 19,489 square meters of land were reserved in May 2007 for the project.

A second factory-apartment is being built the Kaesong Industrial District Management Committee (KIDMAC), and is scheduled for completion by late 2008.

Companies that have moved into the new factory-apartment, meanwhile, said they are satisfied with the proficiency of workers and cheap labor costs.

Ok Sung-seok, president of Nine Mode Co. and chairman of the corporate management committee at the KICOX factory, said Kaesong plants cost a third less to operate than similar plants in China. He added that his shirt-making company should turn a profit by next year.

“I ran a factory in Qingtao, China for four years, but the operating cost there is skyrocketing,” the businessman said. He said Nine Mode closed its Chinese factory and plans to downsize its operations in Seoul so it can concentrate on its efforts in Kaesong.

Ok said that depending on the type of business and size, four or five factories in the factory-apartments should turn a profit by the end of the year.

The Kaesong complex lies 60 kilometers northeast of Seoul, and is hailed as the crowning achievement of the historic 2000 inter-Korean summit. It has played a key role in expanding two-way economic exchange that stood at just $300 million in 1999 to $1.35 billion last year.

Construction of the industrial district began in June 2003, with 3.3 square kilometers of factory land have been built to house up to 450 firms. By 2012, 11.6 square kilometers of industrial park is to be laid down that can hold several thousand South Korean factories and hire over 200,000 North Korean workers.

There are at present about 13,000 North Korean workers employed by 57 South Korean firms in Kaesong that have churned out garments, watches, kitchen utensils, auto parts and other labor-intensive goods since 2004.

The complex just north of the demilitarized zone that separates the two Koreas has been in the spotlight after the second inter-Korean summit. South Korean President Roh Moo-hyun and North Korean leader Kim Jong-il agreed to build a region of peace and prosperity centered around Kaesong and the North Korean city of Haeju, 75 kilometers west of Kaesong.

“People at Kaesong expect progress to be made in such areas as communications and travel, which had previously been an obstacle to the development of the industrial district,” said a KIDMAC official. The prime ministers of the two sides are to meet in November to implement follow-up measures to the summit.

There is only one telephone line linking Kaesong with Seoul, while no mobile phones are allowed in the area. People and materials are also prevented from moving in and out of the complex.

Daily NK
Lee Sung Jin
10/22/2007
(Click on image for original size)

According to DailyNK’s research on prices in North Korea conducted in late September, the prices in Pyongyang are similar to the prices in other parts of the country. The finding shows that Jangmadang (markets) economy has been going through integration and similar distribution process across North Korea.

In the past, domestic commodities were sold cheap, and foreign products were sold expensive in Pyongyang.

DailyNK has been conducting quarterly research on prices in the central such as Pyongan Province and Hamkyung Province and northern areas.

This time the research result shows that the price of rice in a Jangmadang in Pyongyang is 1,350 won/kg, which is similar to the price of rice in Sinuiju, 1,400won/kg. In North Korea, the rice price serves as a gauge for price trends.

In Pyongyang, the exchange rate is about 330 thousands won to 100 dollars, which is the same as the exchange rate in other places. The most famous imported cigarettes, Cat (Craven A) is sold at the same cost of 1,500 won in Pyongyang and other areas.

Subsidiary food is more expensive in Pyongyang. The price of cabbage is 400 won/kg, 50 won/kg higher than cabbage price in Sinuiju. The price of pork ranges from 3,500 to 4,000/kg, 500~1,000 won/kg higher than the pork price in other areas.

The prices of seafood such as brown and green seaweed, and dried Pollack are cheaper in Pyongyang. Seafood caught in Kangwon Province and neighboring areas is transported to markets in Pyongyang in refrigerator car. Since the demand is high, seafood is sold in great quantities, and the price remains low in general.

Movie ticket prices range from 200 to 400 won. Telephone service is charged five won per minute. Overall, the price range for each commodity is high, and many different kinds of goods are available in Jangmadang.

Imported items from China such as socks, sports shoes, or underwear are expensive being sold at a cost of 1,000 won in Pyongyang. That is because there are extra shipping rates and labor costs imposed on Chinese goods transported to Pyongyang. On the contrary, in Sinuiju, imported goods from China are circulated on the market right away.

Often, retail prices are higher in Pyongyang because of high levels of consumption among Pyongyang citizens. However, cigarettes or liquor produced in Pyongyang, or clothes from South Korea circulated to other areas via Pyongyang are sold cheap in Pyongyang.

However, in these days the differences in regional price levels have almost disappeared.

A defector from Pyongyang, Ahn Chul Min (a pseudonym) who came to South Korea in 2006 said, “Prior to 2002, there were individuals who hung around from place to place and made money on price differences. But nowadays, the retail prices are almost uniform across the country because people just use a telephone and find out where to get items they want at what prices.

“Since there is no big difference in retail prices, retailers are not doing well in business,” Ahn added, “Instead, individuals driving a truck and selling goods wholesale are making good money.”

Ahn said, “Not everyone who lives in Pyongyang is well-to-do. Despite of their locations whether in Pyongyang or Chongjin, all markets have goods from South Korea and China. The poor people even if they live in Pyongyang should buy cheap and low quality of products from China. In contrast, those who live in Chongjin and have money can buy goods from South Korea anytime.”

Market Prices Consistent Throughout DPRK
Institute for Far Eastern Studies (IFES)
NK Brief No. 07-10-25-1
10/25/2007

The results of a survey conducted by Daily NK on the price of goods in Pyongyang at the end of September show that prices in the capital were similar to those in rural areas. This is an indication that markets throughout the country are integrated, and evidence that goods can be circulated from region to region.

In the past, the price of domestic goods in Pyongyang was relatively cheep, while imported goods were sold at high prices. During that time, Daily NK carried out local price surveys in central regions such as Pyongan and Hamkyung provinces, as well as in northern areas. According to this latest survey in Pyongyang, the cost of one Kg of rice, the standard measure of the cost of goods in North Korea, was 1,350 won, similar to the 1,400 won price in Sinuiju, and the 1,250 won cost in Hyeryung. An exchange rate of 3,300 won per USD is also in line with rural exchange rates, as is the 1,500 won price tag on a pack of Craven A cigarettes, the most favored imported cigarette in North Korea.

Non-essential food goods are more expensive in Pyongyang than in outlying areas, with one Kg of lettuce selling for 400 won, 50 won more than in Sinuiju. Also, pork in the capital runs between 3,500 and 4,000 won per Kg, which is 500 to 1,000 won more than it would cost elsewhere in the country.

On the other hand, seaweed, dried Pollack, and other marine products are cheaper in Pyongyang than elsewhere. Ocean harvests from Kangwon and neighboring provinces are brought to Pyongyang markets by way of refrigerated trucks. Because of high demand, a variety of goods get delivered, yet overall, prices are held fairly low.

Overall, the price range on a particular ware was very wide, indicating that there was a variety of products available in the markets. The survey found that goods such as undergarments, socks, sneakers imported from China were selling for the high cost of 1,000 won each. In Sinuiju and other northern areas, goods from China are brought directly to markets, but by the time these same goods reach Pyongyang, additional labor and transportation costs force prices up. Pyongyang residents typically have more money to spend than those in rural areas, also leading vendors to raise prices on some goods, however cigarettes and alcohol produced in Pyongyang and distributed to rural areas, as well as South Korean goods which reach DPRK markets by way of Pyongyang, are slightly less expensive in the capital.

Recently, regional price differences have nearly disappeared. Prior to 2002, some traders earned their living traveling from region to region exploiting price differences. However, now with one simple phone call, North Koreans can find out where and for what price goods are being sold, leading the majority of retail prices to be similar throughout the country.

Institute for Far Easter Studies
NK Brief No. 07-10-16-1

The Kaesong Industrial District Management Committee reported on October 10 that after two years and nine months of operation, the total value of goods manufactured in the Kaesong Industrial Complex (KIC) surpassed 200,000,000 USD. In 2005, production by companies in the KIC totaled 15,000,000 USD; in 2006, 74,000,000 USD; and in the first 9 months of 2007, 124,000,000 USD, for a total since 2005 until last September of 213,000,000 USD.

There are currently a total of 45 companies operating in the complex, employing 19,433 North Korean workers and 800 workers from South Korea, for a total of over twenty thousand employees. The Committee’s report further detailed that the production output of the North Korean workers averaged 1,275 USD per person during the first half of 2007, up 28 percent over last year’s per-capita output of 989 USD.

After overall production surpassed 100,000,000 USD at the end of last January, the 200,000,000 USD barrier was broken in only eight months. This expansion of production is a result of a stable business environment, the increase in the number of companies entering the complex and the number of North Korean workers employed, and overall productivity growth.

The 1,275 USD per-capita production output for the first half of the year shows a 28 percent increase over the 989 USD per-capita recorded in 2006, and 15 percent higher than the 1,108 USD per-capita average of the first two quarters of last year. Despite employment regulations calling for continually increasing numbers of workers, which tend to lower productivity statistics, overall North Korean workers’ average per-capita production numbers did not fall, and the increase shown is significant.

The increase in productivity is not unrelated to the level of education of the workers. Currently, the majority of workers in the KIC have at least a high-school education, and more than 20 percent have completed some form of technical college or higher. A technical training center scheduled for completion in October of this year will provide even more formal technical training for the workers, further increasing productivity.