Archive for the ‘Institute for Far Eastern Studies’ Category

Promoting New Technologies and Inventions at the National Exhibition

Thursday, September 27th, 2012

Institute for Far Eastern Studies (IFES)

North Korea is promoting new inventions and technologies with potential to influence the economy and improve the daily lives of the people.

As an extension of that effort, North Korea hosted the 12th National Exhibition of Invention and New Technologies. The KCNA reported on September 19, this exhibition was a meaningful event for promoting intellectual products.

Kim Young-gun, the Commissioner of the National Science and Technology Council said, “One important purpose of the exhibition was to encourage and provide a place for agreements, contracts, and sales between consumers and exhibitors of intellectual products on display.”

He explained, “As a preparatory step, two weeks prior to the exhibition day, we gathered and distributed product and technology proposal information nationwide. We also try to meet the domestic demands and promote distribution of products throughout the country.”

He boasted that the exhibition was a success with over 1,000 orders taken for intellectual products. He also commented that wide varieties of new inventions, with new technologies, were on display and contracts were signed for technology and product development and new inventions.

North Korea established intellectual product regulations with the intention to create an environment favorable for intellectual product distribution and to follow the current trend in science and technology of the international community. North Korea also has a patent and technical literature archives in operation.

North Korea emphasized that this exhibition well displayed the strength and wisdom of the North Korean people in the country’s attempt to rise as a science and technology powerhouse.

North Korea has filed two cases of international patents through the World Intellectual Property Organization (WIPO) this year. WIPO has confirmed that one of the patents filed this April was a cast iron welding rod structure used for industrial material while the other patent was still in the filing process and thus could not be disclosed to the public.

North Korea submitted three patent filings in 2007, seven in 2008, and four in 2011.

North Korea became a member of WIPO in 1974 and joined the WIPO Patent Cooperation Treaty (PCT) in 1980.


Promotion of Foreign Investments into Hwanggumpyong and Other Special Economic Zones

Friday, September 14th, 2012

Institute for Far Eastern Studies

North Korea is exerting efforts in pulling Chinese investments into its special economic zones (SEZs).

On September 7, the 8th Jilin, China-Northeast Asia Investment and Trade Expo was held in Changchun, China as well as the 6th high-level forum for Northeast Asian economic and trade joint venture to promote the joint investment projects of Rason and Hwanggumpyong special economic zones.

At the event, North Korean officials focused on explaining the advantages and favorable conditions for foreign investors, including the joint management committee to be operated by both countries and laws and regulations installed for investment protection.

In the past, North Korea mainly focused on Rason SEZ but this time around, the spotlight was turned to Hwanggumpyong. Chinese officials went on to explain the details of 14.4 square-kilometer Hwanggumpyong SEZ, where five major industries – textiles, modern agriculture, electronics and communications, culture and industrial and trade services – with industry, culture, and service serving as the three major functions of Hwanggumpyong.

Furthermore, the tariff, tax and other benefits will be provided to various industries. The processing trade industry will be exempt from tariffs, and those companies operating for more than ten years will be granted tax exemptions, while those companies contributing to the infrastructure construction, tourism and hotels will be given priority and other favorable conditions. Last year, North Korea only centered its attention to Rason SEZ, with no mentioning of Hwanggumpyong.

Out of the thirty companies that participated at the North Korean exhibit, were from Rason SEZ. These companies represent the successful cases of Rason, recognized for abundant seafood, processed foods, and textile production.

One company from Rason stated, “repair and expansion project for the road connecting Hunchun with Rason will be completed by the end of this year, which will stabilize power supply that can attract more foreign investment from China.” According to a North Korean businessperson, there are 216 companies currently operating in Rason and over 80 percent are joint venture through foreign capital.

Since January 2010, the city of Rason received the designation as the metropolitan city and has improved the business conditions. Foreign companies inviting their business partners from home to Rason became easier, where visas were processed efficiently, as quickly as a day.

There are plans of more briefing sessions for North Korean SEZs to be held in Beijing, later this month. It is planned to be held from September 26 to 27 with over 30 state managed companies and over 100 representatives participating to explain 50 new investment projects.

The invitation of this event reiterated, the purpose of this briefing session was to attract Chinese investment for North Korean companies, for the contribution of economic development and improvement of people’s lives in North Korea.”


DPRK affected by rising rice prices, currency depreciation

Friday, August 10th, 2012

Pictured above (Daily NK): The 2012 Won / US$1 exchange rate up to 2012-7-13.

According to data provided by the Daily NK, the won/dollar exchange rate fell (the won appreciated relative to the dollar) nearly 28.4% from 5,100W/US$1 in December 2011 (a high following Kim Jong-il’s death) to approximately 3,650W/US$1 in February 2012. Since February, however, the won has showed a steady depreciation and the exchange rate has risen 48%  to 5,400W/US$1 as of July 13.

So as I sit here eating breakfast I am wondering what caused these swings in the exchange rate?

Firstly, what was behind the dramatic fall in the exchange rate (and food prices) in January and Febraury? A simple answer may be a decrease in uncertainty and risk.  Following Kim Jong-il’s death, the DPRK did not repeat the mistakes made after the passing of Kim Il-sung.  For the most part markets remained open and “regular” activities of the state were highlighted in the domestic media and reported to contacts overseas. It is also possible that Chinese intervention, particularly in the form of food assistance and trade facilitation, could have played a role.

Secondly, does this mean that the increase in the exchange rate and food prices is a result of growing uncertainty? I am not convinced. It is beyond the scope of a blog post to tease this kind of information out, but here are some other things to think about: Economic uncertainty (pending policy changes, inflationary public finance), balance of trade (fall in net exports/rise in net imports, aid), capital flows (investment, aid, remittances), weather (drought/floods), “lean times” leading up to the fall harvest.

Some of these things matter more than others but it is important to keep in mind that the North Korean won is worth about as much today as it was when Kim Jong-il died. Since the won/US$ exchange rate is highly correlated with the price of rice (a fact that can be visually confirmed on the Daily NK web page) this means that food prices are also pretty high at the moment.

UPDATE 1 (2012-8-16): The Institute for Far Eastern Studies (IFES) has also posted a few words on this topic:

Rice Prices and Exchange Rate on the Rise

Since Kim Jong Un’s ascent to power, the rice prices and exchange rates are on the rise. Despite Kim Jong Un’s proclaimed priority in elevating the quality of life for the North Korean people, uncertainty are prevalent in the country as Kim Jong Un has yet to meet the expectations of the people for economic revitalization or reform.

Compared to last year, the prices of rice last September that ranged 2,400 to 2,500 KPW per 1 kg, has jumped to 4,500 KPW in December right after the death of Kim Jong Il and exchange rates that averaged 2,800 to 3,000 KPW against one USD soared to 5,000 KPW. Although the prices have stabilized since then, the prices are climbing once again, as the price of rice in February at 3,100 KPW has gone up to 3,600 KPW/kg and exchange rate of 3,700 KPW per dollar jumped to 4,800 KPW in June.

In some places, the price of rice is reported to be above the 5,000 KPW range. According to Daily NK, an internet news outlet, the prices of rice in major cities like Pyongyang, Haesan, and Sinuiju has steadily increased for the last four months.

The price of rice in Pyongyang was 2,600 KPW/kg in April but it has slowly climbed to 3,000 KPW in June 5 to 4,900 KPW in end of June and is 5,300 KPW as of July 13. In Sinuiju and Haesan, the rice prices in April were around 2,600 to 2,700 KPW but soared to 4,300 to 5,000 KPW in July 13.

Exchange rates are also unstable as exchange rate to one US dollar that averaged 3,700 KPW in March soared to 4,200 KPW in April 25, 4,400 KPW in July 14 to 5,400 KPW by July 13.

Seasonal factors are also adding to the price fluctuations. May to August is normally a difficult time for North Korea with frequent famine. Combined with extreme drought conditions in June, accelerating inflation, and people’s rising apprehension about the economy, some rice wholesalers are not withholding the sales of rice.

The rising rice prices and exchange rate is expected to continue for the time being. Flood damages and other natural disasters and the trauma from the failure of last currency revaluation in November 2009 are factors adding to the price escalation.


Mixed prospects for economic reform under Kim Jong-un regime

Thursday, July 26th, 2012

Institute for Far Eastern Studies (IFES)

There is increasing speculation that the new Kim Jong Un regime is pushing toward economic reform. This may be due to Kim’s young age, as he is considered to be more open to change than his father.

According to an unnamed South Korean official, there is a growing prospect that North Korea will soon release a new economic reform measure. More and more testimonies from North Korean defectors suggest that since Kim Jong Il’s death, reform measures are slowly taking place. But it is unclear when such new economic reform measure will occur.

North Korea’s behavior also implies that certain economic reform may occur. The spokesperson for the DPRK’s foreign ministry made a statement last month to the KCNA, “The dear respected Kim Jong Un has already set forth a goal of Korean-style development and strategies and tactics for enabling the Korean people to live well with nothing to desire more in the world. He is now wisely leading the general advance of the Korean people for economic construction and improving the standard of people’s living.” This indirectly suggests that the Kim Jong Un regime will put forth a new economic measure.

On the other hand, the content and timing of such still remains uncertain. According to the NK Intellectuals Solidarity, the Central Committee of Workers’ Party decided on a policy to introduce a new economic management system on August 1, one that would be centered around the cabinet.

However, the South Korea-based online newspaper Daily NK released an article on July 10 quoting its source from North Pyongan Province that a new “June 28 Measure” was released internally. This measure is reportedly a type of “our-way” new economic management system, to be enforced from October 1.

What path North Korea will take with the new economic reform is unknown. However, the reform will comprise various economic sectors including agriculture, commerce, production and distribution. Details of the reform are unavailable.

The NK Intellectuals Solidarity predicted that new measures will be centered around the legalization of permitting private investment and commercial activities in service and trade sectors and private contract system for agriculture.

In contrast, Daily NK expects the core of the new economic measure will involve downsizing of cooperative farms (from 10-to-25 people in size to 4-to-6 people) and permit farming in unused lands; enforce government procurement system based on market price and strengthening self-supporting accounting system for companies.

The Choson Sinbo, a Japan-based pro-North Korean newspaper ran an editorial on July 11 that North Korea’s economic revival strategy is to follow the global trend but doing it “our-way.” The news also added that North Korea has already entered the path toward economic restoration and praised Kim Jong Un’s “our-style development goal and strategy” to improve the lives of the people while following the current trend of knowledge-based economy.

The news explicated that emphasis on “following the global trend” did not mean following and copying other nations but aimed for the nation to develop and rise on its own to reach the most advanced level of society. In addition, it is considered a refute against South Korea’s over interpretation about the possibility for opening and reform in North Korea during the Kim Jong Un era.


A brief analysis of Kim Jong Un’s onsite inspections for the last six months

Tuesday, July 10th, 2012

Institute for Far Eastern Studies (IFES)

June 30 marked the six-month period since Kim Jong Un was appointed as the supreme leader, after the sudden death of his father, Kim Jong Il on December 17.

For the first six months in power, Kim Jong Un made a total of 80 official activities, which was 19 activities more than Kim Jong Il, in the same period, last year. Out of the 80 official activities, 28 (35 percent) activities were military related. This is drastically higher than his father’s 3 activities, a mere 5 percent of his total activities. Kim Jong Un holds the top titles in the military, party, and the government as the supreme leader, first secretary of the Workers’ Party of Korea, and first chairman of the Korean People’s Army. But he mainly concentrated on the military for the first half of 2012.

However, his inspection to military units gradually decreased, from 10 in January to 5 from February to April. In May, he made 3 visits while he did not make any visits in June. This suggests he is slowly retreating from military related activities.

In the first half of 2011, Kim Jong Il concentrated heavily on the economy, making 29 onsite inspections (48 percent) to economic sectors while Kim Jong Un has made only 3 visits (3.8 percent) thus far. However, Kim Jong Un made 16 visits to the construction sites of apartment buildings, amusement parks, and other community related sites and appeared in 9 commemorative photo sessions. Upon a closer examination, Kim Jong Un engrossed on visiting military units from January to April and switched over to housing and community sites from May to June. This can be interpreted as an effort in following his father’s undertaking to revive the economy, taking heed to the improvement of welfare for the people.

In particular, it is interesting to note that North Korean media is reporting photo sessions as official activities of its leader. Kim Jong Il has also took photos after his official visits but Kim Jong Un is attending photo sessions as the sole activity. Many experts construe this as image manipulation attempt, to associate Kim Jong Un with Kim Il Sung, as he mingles with the people in photographs.

Another major difference with his father is Kim Jong Un’s lack of diplomatic activities. Kim Jong Il made numerous visits to China and Russia last year and engaged in a total of 7 diplomatic activities which includes inviting Meng Jianzhu, Chinese minister of public security visit to Pyongyang in February. Except for sending congratulatory messages to Cuba and other countries, Kim Jong Un has yet to engage in diplomatic meetings.

One commonality is, Kim Jong Un like his father is enjoying various cultural performances between field inspections. Kim Jong Il is recorded to have attended 18 performances while Kim Jong Un attended 8.

The latest report by KCNA on Kim Jong Un’s official activity is visit to nearly completed Rungra People’s Pleasure Park and the construction site of Breast Cancer Institute in Pyongyang Maternity Hospital on July 1. This is his official visit in 24 days since he attended the 66th anniversary ceremony of Korean Children’s Union.

On the other hand, while Kim Jong Un is increasing contact with the people, control and regulation of the people are also stiffened. After Kim Jong Un rise to power, the number of defectors is steadily declining. According to the Ministry of Unification, only 610 defectors entered the country this year (January to May), which is a drop of 42.6 percent from the previous year of 1,062. An official from MOU confirmed that the decrease in the number of defectors can be attributed to the tightened border control by the North Korean authorities.


North Korean high-ranking official visits Taiwan

Thursday, June 28th, 2012

Institute for Far Eastern Studies (IFES)

A high ranking North Korean official visiting Taiwan gave a statement that, “North Korea is using most of its resources for national defense and military.”

This was revealed in a report released by KOTRA Taiwan Trade Mission. In this report, Kim Jong Gi, the chairman of the Committee for the Promotion of International Tradeof DPRK visited the Taiwan-(North) Korea Business Association to attend a meeting discussing North Korean business trade.

Kim criticized South Korea, Japan and other neighboring countries for harboring antagonistic attitudes toward communist North Korea, and especially the United States for enforcing “violent sanctions” against North Korea.

He also admitted the country was suffering from economic hardships and food shortages since 1995 with four years of continuous natural disasters. In 2011, the total food needed is around 6.5 million tons but the actual production output was only 5.1 million tons, leaving the country 1.4 million tons short.

Kim also explained that North Korea experienced similar economic growth as South Korea and Taiwan in the 1970s and 1980s but as socialist countries began to collapse one after another in the early 1990s, North Korea’s economic trade agreements with other nations became null and hence hindered its economy and trade.

At that time, North Korea was signing purchase agreements on magnesium oxide (about 800,000 ton) with Eastern European countries every year and barter trade with other socialist nations. But with the fall of socialist countries, North Korea quickly lost its long-term trading partners and it failed to take appropriate and necessary actions. Thus, it fell into the vicious cycle of unsold commodities with insufficient funds, leading to inevitable economic downturn.

Kim was the highest official from the DPRK to visit Taiwan. The purpose for his visit was to 1) attract investment from Taiwan for Hwanggumpyong Island and Rajin-Sonbong Special Economic Zone, and 2) express gratitude toward the Tzu Chi Foundation, a Buddhist charity for continuous assistance to North Korea. The Tzu Chi Foundation is reported to have sent aid to North Korea nine times.


Kim Jong-un makes field guidance visits in various community facilities

Friday, June 1st, 2012

Institute for Far Eastern Studies (IFES)

Recently, Kim Jong Un is making a series of visits around various sports and recreational facilities in Pyongyang including Mangyongdae and Kaeson Youth Amusement parks, Ryugyong Health Complex, and People’s Outdoor Ice Rink.

Kim Jong Un is reported to have made field guidance visits to the construction site of Changjon Street, which is approaching its completion. The street will be home to 5 to 45-story apartment buildings with preschools, kindergartens, secondary schools, pharmacy and other educational and health facilities as well as various welfare and service facilities in the vicinity.

The KCNA reported on May 25 the details of Kim Jong Un’s visit to the site.

Kim Jong Un went round various restaurants, shops and stalls and parking lot in the basement, etc. to acquaint himself in detail with the construction of the street.

He looked round various parts of Haemaji Restaurant built in a peculiar style and was satisfied with it.

He made the rounds of various other restaurants including the combined restaurant of the Jung District and Unjong Teahouse built in diverse styles to learn in detail about their size, furnishings, decorations, ventilation, etc.

He personally sat on a chair of the restaurant and underscored the need to thoroughly abide by the principle of guaranteeing convenience first and architectural beauty next when designing and manufacturing any furniture so that it may be convenient for use and look nice.

The KCNA elaborated on Kim’s comments as he looked around the establishment.

He said with pride that the successful construction of the modern street by the efforts of Koreans as required by the new century is a demonstration of the validity of the WPK’s idea of architectural aesthetics and the potential of the Juche-based self-supporting economy.

He indicated important tasks to serve as guidelines for building Pyongyang into a more magnificent city as required by the Songun era

It is also necessary to distribute well educational, healthcare, sports, cultural and welfare facilities and welfare service bases on the principle of ensuring popular character, national identity and modernity.

In addition to these visits, Kim previously gave a talk “On Effecting a Drastic Turn in Land Management to Meet the Requirements for Building a Thriving Socialist Nation” on April 27 with leading officials of the party, state economic bodies, and working people’s organizations to propose a large scale plans for land management.


Workers’ Party conference scheduled for April: A turning point for building a powerful nation

Wednesday, March 7th, 2012

Pictured above (Rodong Sinmun): New propaganda to build awareness of the upcoming KWP conference.

Institute for Far Eastern Studies (IFES) (2012-3-7):

North Korea announced the Workers’ Party of Korea (WPK) Conference would be held in mid-April. Regarding the conference, Rodong Sinmun released an editorial on February 29.

The newspaper editorial titled, “DPRK to Greet WPK Conference with High Political Enthusiasm” commented, “the Party conference is of particular significance in the party development and accomplishment of the Juche revolution as it will open at a historic juncture when a new century of Kim Il Sung’s Korea starts.”

The editorial goes on to elaborate on the significance of the party conference:

The WPK has marked a new historic turning point in its development.

Kim Jong Un is standing at the head of the WPK and revolution.

Under his guidance the Korean revolution is making more dynamic advances and registering signal achievements in the efforts to build a thriving nation.

The party and revolution have a rosier prospect as the bloodline of Mt. Paektu is given steady continuity generation after generation and the center of the leadership and unity remains unshakable.

With Kim Jong Un at the helm of the WPK, it is shedding its rays as a steel-strong party with the greatest dynamism, a revolutionary one with a strong sense of organization and firm unity and principle and as a great mother party genuinely serving the people, deeply rooted among them.

It is the immense pride that the revolutionary comrades-in-arms of Songun are united closer around the Central Committee of the WPK, sharing thought and intention with Kim Jong Un and keeping pace with him.

The forthcoming conference of the WPK will offer an opportunity of increasing its position and role as a powerful political staff for the Songun revolution, steadfast in monolithic ideology and leadership.

The newspaper highlighted the keywords for the upcoming conference will be Kim Jong Il, Kim Jong Un and the party.

The news also emphasized that teachings of Kim Jong Il, his ideology and achievements will be upheld as the sole principle of the party. In addition, the editorial articulated songun politics will be continued as a way to advance the defense industry with Kim Jong Un as the head of the Central Committee of the WPK.

Lastly, the editorial reiterated “under the leadership of the party, revolution and miracle can be created to improve the lives of the people and to complete the construction of powerful nation.”

The Daily NK also reports that security in Pyongyang has already been tightened.


North Korea modifies laws to attract foreign investments

Thursday, February 16th, 2012

Institute for Far Eastern Studies (IFES)

The KCNA announced on February 9 that the “Foreign Investment Bank Law” was modified and supplemented. According to the report, the amended law included “those businesses in operation for over ten years are exempt from income tax on the profit collected in the first year and Bank of Chosun [Bank of North Korea] will be exempt from business taxes on the interest revenue collected from loans provided to companies on favorable terms.”

The previous law already had regulations about exemption of transaction taxes but nothing on business tax. The foreign investment company and foreigner tax law regulated that two to ten percent of profit to be paid by the foreign companies in service and construction sectors.

While the prior law stated, “tax exemption will be provided for the first year for income tax on those businesses over ten years old, and 50 percent exemption will be given in the next two years,” the “50 percent limit” was omitted in the amended legislation.

According to the KCNA, “The law has 5 chapters and 32 articles which included the contents of categorization and specification for areas to establish foreign investment banks, property rights, and autonomy on business management.”

On February 10, the KCNA announced that the Foreign Investment Company Registration Law, Foreign Investment Company and Foreigner Tax Law, and Foreign Investment Company Bankruptcy Law were amended.

In reference to the ordinance of the Supreme People’s Assembly Standing Committee signed on December 21, 2011, provided that this law consisted of 6 chapters and 34 articles with specifics on business establishment, address, tax, and tariff registrations. However, no other details were given.

On January 30, the KCNA also reported the “Labor Law of Foreign Investment Company” was amended and supplemented. This law consists of 8 chapters and 51 articles on hiring and labor contracts, rest, protection, social insurance, and security.

In addition, the “Financial Management Law of Foreign Investment Company” and “Fiscal Law of Foreign Investment Company,” was also modified. However, no other details were provided.

The KCNA has reported that North Korea modified foreign investment laws previously in 1992, 1999, and 2004. This year marks the fourth amendment.

The news elaborated, “The DPRK is encouraging foreign companies to investment in our country based on complete equality and reciprocity and will not nationalize or collect the invested asset,” reiterating the safety and security of foreign investment.

Some analyze the recent amendment as an effort to attract more foreign investment into the country. Similarly, North Korea has recently announced the Special Economic Zone Act for the development of Hwanggumpyong and Wiwha Islands.  In addition, the state-run Academy of Social Sciences published a newsletter emphasizing the rational tax investigation for foreign companies.

The Daily NK also reported on this development:

On February 10th, Choson Central News Agency (KCNA) reported fresh amendments to North Korea’s laws governing foreign investment.

KCNA revealed, “Chosun’s law on the registration of foreign-funded enterprises has changed. 34 articles in 6 chapters of the law, which was made according to a December 21st, 2011 decision of the Standing Committee of the Supreme People’s Assembly to cover the founding, residence, taxation and customs of businesses, have been amended.”

As is ordinarily the case, specific amendments were not included in the report.

On February 9th, North Korea also announced revisions to its Foreign Investment Bank Law issuing exemptions from consumption tax. Last month also saw revisions to banking as well as labor and financial management laws.

The amendments appear aimed at assuaging the fears of Chinese enterprises over issues such as the threat of expropriation. Indeed, China is said to have last month rejected initial laws governing the management of special economic zones at Hwanggeumpyeong and Wihwa Island nr. Shinuiju for a variety of reasons.

Read the full story here:
NK Investment Laws Get Another Makeover
Daily NK
Kim Tae Hong


Kim Jong-un makes over 61 onsite inspection visits

Tuesday, February 7th, 2012

Institute for Far Eastern Studies (IFES)

Since Kim Jong-un’s first election as the vice-chairman of the Korean Workers’ Party Central Military Commission (CMC) on September 28, 2010, Kim Jong-un was reported to have made 33 accompanied onsite inspections with Kim Jong-il and a total of 61 visits at industrial sites.

Out of the 61 total visits, Kim Jong-un inspected the following industries: power/electricity (5 times); metal (3 times), machinery (12 times); agricultural (4 times); light (5 times); food (14 times); and industrial (4 times). Construction sites of Huichon Power Stations were visited four times while the Huichon Ryonha General Machinery Plant and the Kanggye General Tractor Plant were also visited multiple times.

Kim Jong-un’s “economic learning” began while accompanying his late father Kim Jong-il on onsite inspections. Even when Kim Jong-il was alive, Kim Jong-un was most likely to have made preliminary visits to these industrial sites for a closer assessment as a part of his duty as the vice-chairman of the CMC.

The significance of the recent visits mainly lie with inspections to the Huichon Power Stations (located in Jagang Province) equipped with 300,000 kW of power generation capacity. Huichon Power Station was an important national strategic project which was often emphasized by Kim Jong-il, “The construction of the power plant must be completed before the centennial birthday of the Great Leader (Kim Il-sung) with great efforts from the entire party, military and the people.”

The electricity produced at the Huichon Power Station is likely to be distributed primarily in the Pyongyang area around the two national holidays, the Day of the Shining Star (Kim Jong-il’s birthday) and the Day of the Sun (Kim Il-sung’s birthday). Currently, power line constructions are still underway in Pyongyang.

At Huichon, constructions of additional terraced power plants are under planning using the currents from the Yangtze and Cheongcheo Rivers. The electricity produced from these plants is likely to be distributed to the industrial areas in Jagang Province, which is central to the machinery and national defense industries.

Important policy implications can be found from Kim Jong-un’s past accompaniment to the Huichon Ryonha General Machinery Plant with Kim Jong-il. This plant is currently emphasized as Kim Jong-un’s accomplishment and revered as, “the industrial revolution of the new era,” and a “site of CNC (Computer Numerical Control) breakthrough.” In addition, Kim Jong-un’s economic leadership is acclaimed for placing prominence on the state-of-the-art technology and “knowledge-based economy.”

Kim Jong-il visited the Huichon Ryonha General Machinery Plant on October 28, 2011 with Kim Jong-un and inspected the CNC assembly line, CNC processing plant, and CNC machineries. He stressed, “Modernization must be promoted in all sectors and levels founded on the state-of-the-art technology. The achievements in the CNC technology should serve as the stepping stone to move forward toward a higher level of science and technology.”

Similarly on October 27, 2011, Kim Jong-il visited the Yangtze River Machinery Plant* with the younger Kim and stressed, “Powerful economic nation that we are seeking is knowledge-based economy which is only possible when CNC technology and automation is realized that can create material wealth through little resources, efforts, and energy.”

The “knowledge-based economy” will likely become the trademark of Kim Jong-un and esteemed as following the “teachings of Kim Jong-il.” Kim Jong-un’s recent industrial site visits were concentrated on the cutting edge production facilities equipped with modernized and automated production processes.

* NKeconWatch: I believe this name is an error and the correct location is the Jangjagang Machine Plant.