North Korean Economy Watch

Korea Times
Ryu Jin
8/28/2007

A Chinese company is going to be the first foreign enterprise to do business in the inter-Korean industrial park in the North Korean border city of Gaeseong, according to the Korea Land Corporation (KLC) Tuesday.

KLC officials said that Dashing Diva, the South Korean branch of Chinese artificial nail manufacturer Tianjin Jci Cosmetic, signed a contract to purchase a 6,000-square-meter lot in the Gaeseong Industrial Complex.

It marks the first time that a foreign company has bought a site in the inter-Korean joint venture, where about 15,000 North Korean workers commute to factories owned and operated by South Koreans.

While the first-phase pilot site has so far been occupied only by South Korean firms, the KLC designated a portion of land in Gaeseong for foreign businesses to boost the industrial complex’s international image and put the lots on sale in June.

Despite the South Korean government’s efforts to lure foreign investment there, no firms had come from outside the country until recently. Multinational sanitary goods maker Kimberly-Clark has also visited the complex to discuss investment there.

Located just north of the border, the Gaeseong Industrial Complex is a flagship project signifying reconciliation between the two Koreas, which remain still technically at war after a fratricidal conflict more than half a century ago.

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

Gaeseong upbeat with foreign entrants
Korea Herald
Kim Yoon-mi
8/17/2007
 
The recent submissions of applications by two Chinese companies hoping to build factories in the Gaeseong industrial park in North Korea have further brightened the outlook on the joint economic project between the two Koreas, industry sources said yesterday.

South Korean government agency, The Korea Land Corp., said both a Chinese artificial fingernail manufacturer and a plywood producer submitted documents on July 30 in hopes of securing 6,000 square meters and 29,000 square meters of land, respectively, at the Gaeseong industrial park.

The Korea Land Corp. rents land in Gaeseong to individual South Korean or foreign companies under 50-year leases. The company had initially announced in late May that there were six applications available for foreign companies for 1,750,000 square meters of land in Gaeseong. No foreign applications were received until the two Chinese companies submitted their applications in July, according to an official at Korea Land Corp., who declined to be named.

“For foreign companies to build factories in Gaeseong, they should establish entities in South Korea. So, we are waiting for the two Chinese companies to finish that procedure first,” the official said.

The contract with the two companies is expected to be completed late this month, the official said.

Experts say Chinese manufacturers may have decided to move factories to North Korea because China’s rapid economic growth is raising wages and prices.

Currently, an average North Korean employed by any one of the 26 South Korean companies operating in the Gaeseong Industrial Complex earns $60.37 per month.

There have been unconfirmed news reports that the U.S. paper-based consumer product maker Kimberly-Clark Corp. may try to invest in the North Korean city.

Kimberly-Clark CEO Thomas Falk earlier hinted that the company would be interested in investing in Gaeseong, after he visited the North Korean city in late February.

“Gaeseong industrial part has the best environment (skilled labor) and facilities for South Korean SMEs to step forward…. Kimberly-Clark will be very interested in investment (in Gaeseong),” he was quoted as saying by the local daily, Maeil Business, on March 1.

The unnamed official from The Korea Land Corp. said he could not comment on the Kimberly-Clark proposition because he is not at liberty to discuss which foreign companies are in contact with his company.

However, the official said many foreign companies have contacted the Korea Land Corp., inquiring about going into North Korea.

The entry of foreign companies into Gaeseong will clearly be a boon for Hyundai Asan, the South Korean operator of major business projects in North Korea, the company’s officials said. This good news comes in light of a second summit between the two Koreas, another upbeat announcement for the park, Hyundai Asan officials said.

Hyundai Asan is in charge of the construction of factories in Gaeseong industrial park and operates South Korea’s tour business to Mount Geumgang resort in North Korea.

The Gaeseong industrial park, near the border with South Korea, was established in 2000 following the first landmark summit between South Korea’s then-President Kim Dae-jung and North Korean leader Kim Jong-il.

Chinese want some Kaesong action
Joong Ang Daily
8/13/2007

Two small Chinese light-industry companies have applied to build factories in an industrial complex in North Korea where South Korean companies are invested, a South Korean state land developer said on Saturday.

The Korea Land Corp. said a Chinese cosmetics manufacturer and a plywood firm submitted documents on June 30 requesting 6,000 and 2,000 square meters of land respectively in the Kaesong Industrial Complex near Kaesong, a North Korean city close to the border with South Korea.

It is the first time that foreign companies have applied to build plants at the complex where 26 South Korean labor-intensive companies are currently operating with a North Korean workforce of 15,000.

By 2012, it’s anticipated the complex will have several hundred South Korean plants employing as many as 500,000 North Koreans. South Korea is responsible for water, electricity and other infrastructure at the complex which opened three years ago.

The complex is a much-vaunted achievement of the first-ever inter-Korean summit of leaders in 2000 in the North Korean capital, Pyongyang. The second-ever summit of Korean leaders is scheduled to begin on Aug 28, also in Pyongyang.

Korea Times
Na Jeong-ju
8/16/2007

North Korea’s economy posted negative growth in 2006 for the first time in eight years on decreased production of agricultural and fisheries goods, the Bank of Korea (BOK) said Thursday.

In its estimate for the North’s economic growth, the central bank said the North’s real gross domestic product (GDP) shrank 1.1 percent in 2006 from a year ago, a turnaround from a 3.8 percent expansion in 2005. Until 2006, the North’s GDP had grown for seven years in a row since a 6.2 percent rise in 1999.

The GDP is the total output of goods and services produced within a country.

“Due to bad weather, North Korea’s agricultural, forestry and fisheries production fell with the construction industry remaining sluggish,” the BOK said. “North Korea seems to have suffered a blow as its international relations deteriorated due to its nuclear issues on top of a shortage of energy.”

The economic gap between the two Koreas grew larger last year.

North Korea’s nominal GDP increased 5.8 percent from a year ago to $25.6 billion last year, while South Korea’s GDP rose to $887.3 billion. South Korea’s GDP is 34.7 times larger than that of North Korea, widening from a 32.6-fold difference in 2005.

North Korea’s per-capita gross national income (GNI) came to $1,108 last year, up from $1,056 a year earlier, while South Korea’s per-capita GNI of $18,372 was 16.6 times bigger than that of the North, expanding from a 15.5 fold-difference. The North’s population reached 23.1 million, while the South’s was 48.3 million.

North Korea’s trade remained unchanged year-on-year at $3 billion last year, compared with South Korea’s $634.9 billion. The South’s trade was 212 times bigger than the North’s last year, rising from a 182-fold difference in 2005.

Pyongyang saw its exports dip 5.2 percent year-on-year to $950 million in 2006 as outbound shipments of animal products, non-metal goods and machinery decreased, while imports gained 2.3 percent to $2.1 billion.

Inter-Korean trade increased 27.8 percent from a year earlier to $1.4 billion. South Korea’s shipments to North Korea advanced 16 percent to $830.2 million, mainly on increased rice and fertilizer aid.

Inbound shipments from the North jumped 52.7 percent to $519.5 million on a hike in inter-Korean projects and mineral imports, the BOK said.

North Korea’s agricultural, forestry and fisheries industry declined 2.6 percent year-on-year last year, a turnaround from a 5 percent gain in 2005. The construction industry dipped 11.5 percent after gaining 6.1 percent the previous year.

The mining sector growth decelerated to 1.9 percent from 3.5 percent. Its manufacturing sector expansion slowed to 0.4 percent from 4.9 percent. The services industry grew 1.1 percent last year after increasing 1.3 percent in 2005, the central bank said.

North Korean economy posted 2006 downturn
Joong Ang Daily
Jung Ha-won
8/17/2007

North Korea’s economy shrank for the first time in eight years last year as agricultural production declined due to natural disasters and sluggish infrastructure development, according to estimates by South Korea’s central bank.

The Bank of Korea said yesterday that it believes North Korea’s 2006 gross domestic product declined 1.1 percent from a year earlier, the first downturn since 1999. The BOK, since 1991, has estimated the figures based on data from South Korean intelligence agencies and other research institutes. North Korea does not release economic data.

According to the estimate released yesterday, North Korea’s agriculture and marine industries last year declined 2.6 percent from 2005, when production rose by 5 percent.

“North Korea suffered from a serious flood last year, in stark contrast to 2005 when there was no major flood and farm production was good,” said a BOK official who refused to be named.

Growth in mining production, one of North Korea’s major industries, slowed to 1.9 percent from 3.5 percent in 2005. Manufacturing inched up 0.4 percent, down from 4.9 percent growth in 2005.

Construction sector production showed the biggest downturn at 11.5 percent from a year earlier, compared to 6.1 percent growth in 2005, as road and railway construction slowed, the central bank said.

Using satellite data, the bank estimated North Korea built just 49 kilometers (30.4 miles) of new roads last year, a sharp decline from 310 kilometers built in 2005.

KCNA
8/12/2007

General Secretary Kim Jong Il gave on-site guidance to the Hamhung Wood Processing Factory.

After being briefed on the history of the factory at the room devoted to its history, he walked round the house of culture and other cultural facilities. He noted with appreciation that the workers of the factory are fully enjoying diverse cultural life at the modern house of culture and having brisk mass sports activities.

Then he looked round the computer control room, the sawing shop, the processing shop, the finishing shop and other production processes one by one to acquaint himself in detail with the technological updating and production there.

He highly appreciated the feats performed by the officials, workers and technicians of the factory and extended warm regards to all its employees, noting that the appearance of the factory has undergone a radical change and the production sharply gone up in a few years as they have dynamically pushed forward the technological updating through their concerted efforts.

It is the main thrust of the on-going general march to speed up the technological updating for the modernization of economy and give fullest play to its potential, while directing primary efforts to rapidly improving the standard of people’s living, he said, underscoring the need for all the factories and enterprises to boldly carry out this work.

He set forth tasks to be implemented by the factory, saying that what is important for the production of wooden products is to improve their quality and increase their variety.

He was accompanied by Hong Song Nam, chief secretary of the South Hamgyong Provincial Committee of the WPK, Kim Ki Nam, secretary of the Central Committee of the WPK, and Pak Nam Gi, department director of the C.C., WPK.  Nam Gi, department director of the C.C., WPK.

KCNA
8/11/2007

General Secretary Kim Jong Il gave on-the-spot guidance to the Hungnam Fertilizer Complex.

He was accompanied by Chief Secretary of the South Hamgyong Provincial Committee of the WPK Hong Song Nam and Secretary Kim Ki Nam and Department Director Pak Nam Gi of the WPK Central Committee.

He first went round the revolutionary museum.

Noting that the complex turned into the nation’s dependable big fertilizer producer under the wise leadership of President Kim Il Sung, he said that the undying revolutionary feats of the President would always remain shining in the history of the country.

Then he looked round the newly reconstructed fertilizer production processes to learn about the construction and production there.

Watching the gigantic fertilizer production processes which demonstrate the might of the Juche-based industry, he expressed great satisfaction over the fact that the complex has successfully built a great structure in the spirit of self-reliance fully meeting the need of the new century.

It is a great success that the complex has completed the difficult and complicated reconstruction project requiring high technology in a brief span of time by its own efforts and technology, he said, highly appreciating the feats performed by the officials, workers and technicians of the complex who have devoted all their wisdom and energies to the project and the scientists, technicians and workers of the State Academy of Sciences, the Hamhung Branch of the academy, Hamhung University of Chemical Engineering, the Ryongsong Machine Complex and other units who helped them in the project with an attitude befitting master.

Noting that the successful completion of the updating of the fertilizer production processes, a product of the spirit of self-reliance, is one more demonstration of the might of the nation’s rapidly developing science and technology, he stressed that there is nothing impossible when they strive hard to introduce advanced science and technology in a bold and positive manner.
 
Now that the fertilizer production processes have been updated, it is necessary, accordingly, to improve the management of equipment and technical control and raise the level of technical skills of the workers and thus keep the fertilizer production going at a high rate, he stressed.

He set forth tasks to be fulfilled by the complex, saying that the complex has a very important duty to fulfill for the purpose of developing the nation’s agriculture.

In order to solve the problem of food, a key point in the issue of clothing, food and housing, it is necessary to actively develop agriculture and increase the supply of fertilizers for successful farming, he noted, underscoring the need to focus efforts on the fertilizer production, always bearing in mind the President’s proposition that “Fertilizer immediately means rice and rice, socialism.”

He pointed out that in order to boost the production and supply of efficacious fertilizers it is necessary to keep energetically pushing ahead with the technological updating to furnish all the production processes of the complex with latest equipment and intensify the drive to introduce advanced technology.

He underlined the need for the complex to establish a fertilizer production system depending on locally-available raw and other materials and conduct strenuous scientific researches to steadily cut down the production cost for the purpose of strengthening the Juche character of the chemical fertilizer industry.

He had a photo session with the labor innovators of the complex.
 
At the end of his on-site guidance, he together with the innovators who have performed feats in the reconstruction project appreciated a performance given by the employees art group of the complex at the Workers’ House of Culture.

Institute for Far East Studies (IFES)
8/3/2007

Pyongwha Motors, the South Korean company producing automobiles in North Korea will expand into truck manufacturing from this year. According to an official from the company, the manufacturer, currently producing six models, plans to begin truck production within the year, and is working together with Hwacheon Motors and other enterprises in the Chinese city of Shenyang.

Pyongwha Motors currently manufactures three models in the ‘Bukkuki’ (Cuckoo) SUV series, a pickup truck, the mid-size sedan ‘Wuiparam II’ (Whistle II), and the minibus ‘Samchunri’ (Throughout Korea). As of yet, the company has not decided what type of truck it will produce. The company’s truck production is a result of demand in North Korea. Farms, organizations, factories and other consumers have been asking Pyongwha Motors to “produce a truck that will allow a little bit more to be loaded” onboard, and the company has been listening.

An official from the company stated, “if truck production gets underway, last year’s production of 600 to 700 vehicles will be surpassed and more than 1000 vehicles [will be produced] this year,” and went on to explain that the next step is to decide on an exact model through cooperation between North Korean and Chinese counterparts.

Pyongwha Motors, operated through an equity joint venture between South Korea’s Pyongwha Motors Group and North Korea’s Chosun People’s Leisure Group, first produced an automobile based on a model of an Italian Fiat, and in its second stage of operations, produced SUVs and pickup trucks. Today, the company is in its third stage of operations, producing minibuses, trucks, and mid-size sedans.

Yonhap
8/1/2007

Pyeonghwa Motors Corp., a South Korean automaker with exclusive rights to produce cars for the North Korean market, said Wednesday it has been in talks with Chinese automaker Brilliance Automotive Holdings Ltd. to assemble trucks in North Korea, a company official said Wednesday.

In North Korea, Pyeonghwa Motors is assembling some 600-700 vehicles, including sport-utility ones, sedans and mini buses, a year at its plant in Nampo, near the capital Pyongyang.

The North has requested Pyeonghwa Motors to produce trucks for farmers and factory workers, the official said.

“We will soon select a truck model after consultations with North Korean and Chinese sides,” the official said on the condition of anonymity, citing protocol.

If the North Korean plant begins production of trucks, annual vehicle sales of Pyonghwa Motors in North Korea will exceed 1,000 units, the official said.

The North’s economy went into a steep decline in the early 1990s after the collapse of the Soviet Union, according to reports released by South Korea’s Bank of Korea.

However, since the late 1990s, the North Korean economy has been growing again, helped by an influx of foreign aid and better weather, the South’s central bank said.

Institute for Far Eastern Studies (IFES)
8/1/2007

INTER-KOREAN RELATIONS

Following two days of talks between economic representatives of the two Koreas at the Kaesong Industrial Complex, South Korea announced on July 7 that it would begin shipping raw materials to the North in exchange for DPRK natural resources. South Korea shipped 800,000 USD of polyester fabric on July 25, and is set to send the rest of the materials by the end of November. North Korea accepted South Korean prices for the goods, and will pay transportation, cargo working, and demurrage costs, as well. South Korea will pay for shipping, insurance, and the use of port facilities. On 28 July, a South Korean delegation left for the North in order to conduct on-site surveys of three zinc and magnesite mines. The team will spend two weeks in North Korea.

It was reported on 17 July that North Korea proposed a joint fishing zone north of the ‘Northern Limit Line’ dividing North and South territorial waters to the west of the peninsula. Seoul turned down the offer.

Inter-Korean military talks broke down early on 26 July after only three days of negotiations as North Korea insisted on the redrawing of the Northern Limit Line.

North Korea demanded on 27 July that workers in the Kaesong Industrial Complex be given a 15 percent pay raise. The North Korean workers will not work overtime, weekends or holidays beginning in August unless the raise is granted.

It was reported by the Korea International Trade Association on 26 July that inter-Korean trade was up 28.6 percent in the first six months of 2007, totaling 720 million USD.

RUSSIA-DPRK INVESTMENT

It was reported on 19 July that Russia and North Korea have agreed to connect Khasan and Najin by rail, enlisting investment from Russian oil companies interested in an inactive refinery at Najin Port capable of processing up to 120,000 barrels per day. The project is estimated to cost over two billion USD.

MONGOLIA-DPRK RELATIONS

During a four-day visit to Mongolia by Kim Yong-nam beginning on 20 July, the two countries signed protocols on cooperation on health and science, trade and sea transport, and labor exchange issues. This follows on the heals of an agreement to allow South Korean trains to travel through North Korean territory on to Mongolia in route to Russia and Europe.

JAPAN-DPRK PROPAGANDA

Japan took one step further to recover abductees in North Korea this month when the government began broadcasting propaganda into the DPRK intended for Japanese citizens. The broadcasts are made in Korean and Japanese (30 minutes each) daily, and updated once per week.

U.S.-DPRK PEACE PROSPECTS

U.S. Ambassador to the ROK Alexander Vershbow stated that Washington was prepared to negotiate a permanent peace regime on the Korean Peninsula by the end of the year if North Korea were to completely abandon its nuclear ambitions.

EGYPT-DPRK INVESTMENT

The Egyptian company Orascom Construction Industries announced a 115 million USD deal with North Korea’s state-owned Pyongyang Myongdang Trading Corporation to purchase a 50 percent state in Sangwon Cement. To put this in perspective, the deal in worth more than four times the amount of frozen DPRK funds that had caused six-party talks to break down and delayed the implementation of the February 13 agreement.

NORTH KOREAN SOCIETY

The Economist reported on 7 July that, according to foreigners living in the North’s capital, concern for petty law appears to be weakening. Citizens are reportedly smoking in smoke-free zones, sitting on escalator rails, and even blocking traffic by selling wares on the streets.

It was reported on July 11 that a letter sent earlier in the year by the North Korean Red Cross indicated severe shortages of medical supplies. The letter stated that North Korea would accept any medicine, even if it was past expiration, and accept all consequences for any problems that arose from using outdated supplies. The (South) Korea Pharmaceutical Manufacturers Association had no choice but to reject the request.

Events were held on July 11 in North Korea in order to promote women’s health and well-being issues. Marking World Population Day, a North Korean official stated that the DPRK has cooperated with the UN Population Fund since 1986, and is now in the fourth phase of cooperation.

Seeing entertainment venues as a “threat to society”, North Korean security forces have been implementing a shutdown of karaoke bars and Internet cafes. These venues mainly cater to traders in the northern regions of the country.

It was reported on July 13 that construction of North Korea’s first all-English language university was nearing completion. The Pyongyang University of Science and Technology, funded largely by ROK and U.S. Christian evangelical groups, will hold 2600 students and offer undergraduate and post-graduate degrees in business administration, information technology, and agriculture.

Local elections were held on 29 July for DPRK provincial, city, and country People’s Assemblies. 100 percent of 27,390 candidates were approved with a 99.82 percent turnout reported.

Now available on Google Earth! 
(click above to download to your own Google Earth)

North Korea Uncovered v.3

Google Earth added a high-resolution overlay of the area between Pyongyang and Nampo.  In it, most of the Koguryo tombs listed with UNESCO are now distinguishable.  In addition, viewers can see the latest Kim Jong Il palace (including a yacht), the DPRK’s premier golf course, and the Chinese-built Taean Glass factory.  I have also made some progress in mapping out the DPRK electricity grid.

This is the most authoritative map of North Korea that exists publicly today.  Agriculture, aviation, cultural institutions, manufacturing, railroad, energy, politics, sports, military, religion, leisure, national parks…they are all here, and will captivate anyone interested in North Korea for hours.

Naturally, 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. 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 on the more “controversial” locations. In time, I hope to expand this further by adding canal and road networks.

I hope this post will launch a new interest in North Korea. There is still plenty more to learn, and I look forward to hearing about improvements that can be made.

Yonhap
7/27/2007

South and North Korea will start a joint on-site survey this week of three zinc and magnesite mines in the North’s mountainous northeastern region, the Unification Ministry said Friday.

“The zinc deposit in Komdok mine is about 200-300 million tons, the largest in East Asia, and magnesite deposits in Ryongyang and Taehung are about 4 billion tons, the world’s third largest,” a ministry official said.

Ahead of the 15-day joint survey of the mines starting from Saturday, the South started shipment of light industry materials worth US$80 million to the North on Wednesday. The first shipment was 5 million tons of polyester fabric worth $800,000.

Earlier this month, the two Koreas agreed on how to cooperate in natural resource exploration in the North in return for the South’s provision of light industry materials.

In 2005, South Korea agreed to offer industrial raw materials to the North to help it produce clothing, footwear and soap starting in 2006. In return, the North was to provide the South with minerals after mines were developed with South Korean investments guaranteed by Pyongyang.

But the accord was not implemented, as North Korea abruptly cancelled the scheduled test runs of inter-Korean cross-border trains in May last year, apparently under pressure from its powerful military. The two Koreas carried out the historic test run of trains across their heavily armed border in mid-May.

Bloomberg
Bradley K. Martin
7/26/2007

To make painkillers and antibiotics in his factory in Pyongyang, Swiss businessman Felix Abt needs reagents, chemicals used to test for toxic impurities. Abt can’t get them now — because the world refuses to sell North Korea a product that is also used to manufacture biological weapons.

Such sanctions on trade with the regime of Kim Jong Il — some dating back to the Korean War — may be the next diplomatic battleground after North Korea bowed to pressure last week and shut down five nuclear facilities at Yongbyon.

North Korea said July 16 that ending sanctions, and its removal from a U.S. list of countries that sponsor terrorism, are prerequisites for further progress in the negotiations to end its nuclear weapons program. The U.S., meanwhile, says the next step is for North Korea to disclose all its nuclear capabilities, followed by a permanent dismantling of Yongbyon.

North Korea is playing a “tactical game,” said David Straub, a Korea specialist at Johns Hopkins University’s School of Advanced International Studies in Washington. After shutting down Yongbyon and receiving a pledge of 950,000 tons of oil, the reclusive nation will try to “force the U.S. and others to lift sanctions,” Straub said in an e-mail exchange.

While many of the post-Korean war sanctions were lifted between 1994 and 2000 by President Bill Clinton, Americans are prohibited from exporting “dual-use” products or technologies, a wide range of items that might have military as well as civilian applications — including reagents and even aluminum bicycle tubing, which might be used to make rockets.

UN Sanctions

Much of the world joined the sanctions regime after North Korea tested an atomic device last October. The United Nations called on member states to stop trade in weapons, “dual-use” items and luxury goods. Japan went further, stopping used-car exports and banning port calls by North Korean vessels.

Now that North Korea has shut its facilities at Yongbyon and allowed in international inspectors, the haggling will begin on the next steps. If its demands aren’t met, North Korea could kick out the inspectors and restart the plants, as it did in 2002.

“The Bush administration must choose between settling for a temporary closure of the nuclear sites and taking a strategic decision to coexist” with North Korea, said Kim Myong Chol, Tokyo-based president of the Center for Korean-American Peace, who for three decades has encouraged foreign reporters to consider him an informal North Korean spokesman. “Otherwise, the agreement will break up, leaving the U.S. with little to show.”

‘Contentious Issue’

Sanctions represent “a multiplicity of issues that could become contentious,” said economist Marcus Noland, North Korea specialist at the Peterson Institute for International Economics in Washington, in an e-mail exchange. China has already called for the lifting of the UN sanctions imposed Oct. 14.

North Korea agreed with the U.S., South Korea, Russia, China and Japan on Feb. 13 to close its Yongbyon reactor, which produced weapons-grade plutonium, and to eventually declare and disable all of its atomic programs. Working groups will meet in August before another round of talks in September.

If the U.S. insists on a list of all the country’s nuclear facilities without starting to negotiate on sanctions, North Korea might consider that “a spoiler” for the talks ahead, Kim Myong Chol said.

Swiss businessman Abt said that in the past he could get around U.S. sanctions for his North Korean pharmaceutical factory by buying supplies from other countries. The UN sanctions shut off those sources.

Using Old Stocks

“Luckily, we have enough stock of reagents, but when it runs out we would not be able to guarantee the safety of our pharmaceuticals any longer,” he said.

Abt, 52, is president of Pyongsu Pharma Joint Venture Co., an enterprise with ties to the Ministry of Public Health that makes painkillers and antibiotics for humanitarian organizations in North Korea. He is also president of Pyongyang’s European Business Association.

“The same is true in many other civilian industries,” said Abt, who moved to North Korea from Vietnam five years ago. Gold mines are affected too, he said: “If they cannot import cyanide, they can’t extract the gold.” Cyanide is another “dual-use” product, part of the process for making some chemical weapons, he said.

All this has “a highly negative impact” on the economy at a time when the regime has announced it wants to focus on development, Abt said. Foreigners are showing “more and more interest in doing business here,” Abt said, predicting that North Korea will eventually be regarded as a successor to Vietnam as “the newest emerging market.”