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Optimism remains on gas pipeline between North and South Korea

Tuesday, September 13th, 2011

Institute for Far Eastern Studies (IFES)
2011-9-7

An article entitled, “Joint energy project on the agenda” was featured in the KCNA on August 31, which elaborated on the agreement reached between the DPRK and Russia on August 24 for the construction of a gas pipeline. The joint project is also inclusive of South Korea.

The KCNA said in the article, “The three countries have explored various options in transporting gas and have reached a consensus on building a gas pipeline running through North Korea will be the most cost-effective option.”

It also stressed this project will be beneficial for all three parties. In addition, Russia was commended as the major world power in natural gas and oil reserves and production and stressed Russia is turning its attention to expanding the energy sector.

When the Sakhalin – Komsomolsk – Khabarovsk pipeline that began construction in 2009 is completed, it will be equipped to provide enough gas not only domestically but across the Pacific-Asia region, producing a capacity of 30 billion cubic meters of gas per year.

The news also covered the specific plans of the Russian government to expand its energy supply; to boost the exports of oil and gas from three to thirty percent and five to twenty-five percent respectively, until the year 2020.

Therefore, the inter-Korean gas pipeline construction between the DPRK and Russia will be a vital project for Russia.

On August 30, the ROK’s Grand National Party (GNP) chairman Hong Jun-pyo declared, “The trilateral negotiation will be expected to take place sometime in November on the inter-Korean gas pipeline project.”

Hong also stated, “The ROK-Russia and the DPRK-Russia bilateral agreements have already been reached. Once the three parties meet to sign the tripartite agreement, the project will soon take off.” He also added, “President Lee Myung-bak has quietly pushed forward with the gas pipeline project since he first took office and it will be his major accomplishment.”

After the bilateral summit was held between the two leaders of Russia and the DPRK on August 24, the two nations have consented to establish a special commission to work cooperatively on the gas transit project running through the territories of North Korea to South Korea.

Posted in Energy, Foreign direct investment, Institute for Far Eastern Studies, Natural Gas, Russia, South Korea | Comments Closed

2011 flooding reports, studies

Wednesday, September 7th, 2011

UPDATE 9 (2011-9-6): South Korea is slated to deliver flood relief assistance next week. According to Yonhap:

South Korea’s Red Cross said Tuesday it will send baby food to North Korea across their heavily fortified border next week as its first batch of its emergency aid to North Korea’s flood victims.

The move came a month after Seoul offered to send 5 billion won (US$4.7 million) worth of emergency relief aid, including baby food, biscuits and instant noodles, to North Korea.

South Korea’s Red Cross said in a message to its North Korean counterpart on Tuesday that it will truck 200,000 packs of baby food in the eastern and western sections of the border next Thursday.

The Red Cross said it will send other relief items by the middle of October and it proposed holding consultations with North Korea to ensure Seoul’s aid to North Korea reaches the intended beneficiaries.

…

Last year, Seoul sent 5,000 tons of rice, 3 million packs of instant noodles and 3,000 tons of cement to North Korea to help it recover from devastating floods.

UPDATE 8 (2011-9-4): The US Government has send flood relief supplies to the DPRK. According to CBS News:

State Department spokeswoman Victoria Nuland says the plane is carrying blankets, soap and hygiene kits. It will arrive in Pyongyang this weekend.

The U.S. has said it will provide North Korea $900,000 in emergency aid through U.S. charities.

On September 4th, KCNA posted video of the plane arriving. See it here (if you are allowed).

Samaritan’s Purse also posted two videos of their departure to and arrival in Pyongyang.

According to the Associated Press:

Samaritan’s Purse said it has pledged $1.2 million in addition to the $900,000 that the U.S. government has allocated for aid to North Korea through U.S.-based charities.

Ken Isaacs, a Samaritan’s Purse vice president, said the group has worked with the U.S. government and several other Christian organizations to send the aid as they try to “continue gaining humanitarian access into North Korea.”

Here is a list of US-DPRK engagement in 2011.

At least one report from Rason seems to indicate that the DPRK’s impending food shortage is not so severe of a problem.

UPDATE 7 (2011-8-23): United Grain Sends First Wheat Shipment to North Korea as Aid. According to the San Francisco Gate:

United Grain Co., Russia’s state grain trader, sent its first shipment of 3,560 metric tons of milling wheat to North Korea as humanitarian aid, the company said in an e-mailed statement today.

The ship arrived at the North Korean port of Hynnam, from Russia’s Vladivostok port on Aug. 20, the company said. It was the first of several shipments.

United Grain will send 50,000 tons of wheat from ports in Vladivostok and Novorossiysk to North Korea, the statement said.

UPDATE 6 (2011-8-22): According to this article in The Telegraph, the North Korean Red Cross has launched a £2.7m emergency appeal to help the victims of a series of floods and storms. More information can be found here and here.

UPDATE 5 (2011-8-19): The IFRC has posted a map of the counties in which they are involved in flood relief. See it here. The IFRC has also posted an emergency appeal for assistance. You can see it here.

UPDATE 4 (2011-8-18): US to provide $900,000 in emergency relief supplies to North Korea after devastating floods. Read more at the AP (Via Washington Post) and Reuters. Here is a collection of stories related to the DPRK’s alleged food shortage this year. Here is a list of DPRK-US engagement events this year.

UPDATE 3 (2011-8-10): ROK lists food items it will donate to the DPRK in the wake of flooding. According to the Daily NK:

The South Korean government today transmitted to the North a list of the aid items it will deliver in response to recent flooding.

A spokesperson for the Ministry of Unification reported the news this afternoon, saying, “We transmitted a communication containing a concrete list of aid items to the North this afternoon in the name of the president of the Korea National Red Cross.”

The aid includes; 1.4 million units of high protein food, 300,000 units of snacks, 1.92 million Choco Pies and 1.6 million units of instant noodles, but, as previously reported, does not include rice, wheat flour or building materials.

The aid is expected to be conveyed overland along the west and east coasts to areas of Hwanghae and Gangwon Provinces.

“We excluded North Korea’s requested food and cement, but with the exception of medicines the emergency aid was modified mostly as per the North’s request,” the spokesperson explained.

UPDATE 2 (2011-8-10): ROK offers to send relief items to flood-hit DPRK. According to Yonhap:

South Korea sent North Korea a list of relief items it is willing to deliver to flood victims in the impoverished nation, an official said Wednesday.

The South’s Red Cross delivered the message to the North earlier Wednesday, offering 5 billion won (US$4.6 million) worth of emergency staples including nutritional foods for infants, biscuits and instant noodles, according to the official from the Unification Ministry.

UPDATE 1 (2011-8-9): EU provides resources for flood victims. According to the Korea Herald:

The EU, which shipped food aid to the impoverished state to feed its starving people last month, has donated 200,000 euros ($280,000) to the International Federation of Red Cross in flood aid, Voice of America reported, quoting an EU official.

ORIGINAL POST (2011-8-9): Relief Web has put together a compendium of stories and reports (DPRK, ROK, IFRC, and UN) related to recent flood damage in the DPRK (July and August). Below are links and descriptions:

Briefing kit 1: Situation reports (PDF) on the flooding:

1. DPRK affected by serious floods following torrential rains in July
2. GIEWS Country Brief: Democratic People’s Republic of Korea 08-August-2011
3. Democratic People’s Republic of Korea: Floods DREF operation n° MDRKP003
4. Heavy Rain Damage: Situation Report #2
5. Floods: Situation Report #1

Briefing kit 2: This report (PDF) is an update of the August 7 collection and features media clippings and situation reports:

1. Democratic People’s Republic of Korea – Flood Update
2. Russia to Send 50,000 Tons of Food Aid to N.Korea
3. DPRK affected by serious floods following torrential rains in July
4. GIEWS Country Brief: Democratic People’s Republic of Korea 08-August-2011
5. Flood Damage Gets Serious
6. Seoul Greenlights Food Aid for N.Korea, But Not Rice, Cement
7. Nationwide Relief Effort Launched for S. Hwanghae Province
8. Downpour Batters DPRK Again
9. Damage from Heavy Rains
10. Red Cross Relief Activities Launched in DPRK
11. S. Korea offers N. Korea flood aid
12. Floods (as of 29 Jul 2011)
13. Democratic People’s Republic of Korea: Floods DREF operation n° MDRKP003
14. N. Korea PM inspects flooded region: state media
15. N. Korea storm, rains ‘kill dozens’: state media16. N. Korea state media says China to send flood aid
17. Rain leaves trail of destruction in North Korea
18. Floods wash N. Korean landmines into S. Korea
19. DPRK Hit by Heavy Rain Again
20. S.Koreans on landmine alert after deadly mudslides
21. Floods – July 2011
22. Heavy Rain Damage: Situation Report #2
23. Floods: Situation Report #1
24. Coal Mines Damaged by Heavy Rain
25. Floods Hammer Homes And Fields
26. Heavy Rains Hit DPRK
27. DPRK Hit by Heavy Rainfalls Again
28. Some Areas of DPRK Hit by Heavy Rain

Posted in Foreign aid statistics, International Aid, International/Korean Red Cross, Samaritan's Purse, Statistics, USA | 2 Comments »

Road to Rason (38 North)

Tuesday, August 30th, 2011

38 North
Andray Abrahamian
2011-8-29

A bus bumps and bruises its way along the unpaved road, carrying would-be investors to Rason’s First Rason International Trade Exhibition which ran from August 21-25, 2011, in Sonbong. The windows are open, until a crimson humvee barrels past, its powerful suspension dancing on the road, leaving behind a plume of beige dust. The bus windows snap shut, the still air quickly gets hot and more than one of the passengers wishes we were Chinese high-rollers, being whisked to the Emperor Casino and Hotel, which sits beautifully on Korea’s East Sea, overlooking Bipa Island and flanked by lush green mountains and crystal waters.

The passengers of the humvee-part of the casino’s fleet-will long be checked in and gambling their fortunes away by the time we complete our two and a half hour journey. However, it won’t always be this way. Rason’s 50km road to the border is finally being upgraded. Indeed, the 2.5 hour journey took 3.5 hours in June. Since then, the road has been widened, the first stage of the construction plan, allowing for traffic to flow both directions more easily and smaller passenger vehicles to overtake the more cumbersome truckers who ply the road.

Its construction is an important sign in the development of the Rason Special Economic Zone. Rason, an amalgamation of the names of the area’s two biggest cities, Rajin and Sonbong, could theoretically be a vibrant hub for both logistics and manufacturing. It is located in the far Northeast of the Democratic People’s Republic of Korea, bordering Russia and China. It has abundant, cheap labor and the region’s northernmost ice-free port. It has been a legal entity since the early 1991, but has struggled to reach its potential in the face of ambivalence from Pyongyang and difficult geopolitical circumstances.

Local administrators have bold plans for this experiment in economic opening-up and to develop as the Rason Municipal People’s Committee has imagined, an efficient road link with China’s Northeastern provinces is vital. For about a decade, improvements to the road have been “under discussion” and “coming soon,” but it is now undeniably underway. Work began in May of this year…READ MORE HERE

Posted in Automobiles, China, Choson Exchange, Economic reform, Foreign direct investment, Railways, Rason Economic and Trade Zone (Rajin-Sonbong), Rason International Trade Fair, Russia, Sea shipping, Special Economic Zones (Established before 2013), Tourism, Transportation | Comments Closed

Foreign shareholding in Daedong Credit Bank sold

Sunday, August 28th, 2011

Pictured Above (Google Earth): The Taedong Credit Bank offices at the Potonggang Hotel. See in Google Maps here.

London UK/Pyongyang DPRK, 26 August 2011
The Board of Daedong Credit Bank is pleased to announce that the foreign shareholding in Daedong Credit Bank has been sold to a Chinese based corporate entity, the “Nice Group”.

The foreign-appointed directors on the Board of Daedong Credit Bank have resigned with immediate effect, and have no further interests (financial or fiduciary) in the company.

Outgoing CEO of Daedong Credit Bank, Nigel Cowie noted:

“I am now heavily involved with a second joint venture company in the DPRK, Hana Electronics JVC. Established in 2003, this company has enjoyed solid commercial success and has recently opened its new headquarters building, together with the expansion of its business lines.

The success of both ventures has been such as to necessitate a decision to focus on one or the other, and a commercial decision had to be made.

The bank is continuing to enjoy the commercial success it has seen for the past 16 years, but ironically the decision has been made easier by the general sanctions-laden environment in which financial business here is framed these days.

As to the possibility of ever re-entering the bank, any decision we make will be based purely on commercial considerations.”

Both Hana Electronics and Phoenix Commercial Ventures bank with DCB, and will continue to do so.

About Daedong Credit Bank

Daedong Credit Bank is a joint venture retail bank based in Pyongyang. It was established in 1995 as “Peregrine Daesong Development Bank”. The Bank underwent a change of name and foreign ownership in 2000.

The wealth of experience garnered over Daedong Credit Bank’s 16 years of successful operation is unrivalled.

Daedong Credit Bank was the first, by fifteen years, foreign majority held bank in the DPRK. DCB is proud to be regarded as a flagship successful joint venture in the DPRK, and a key part of the infrastructure needed to assist the foreign-invested joint ventures, which contribute to the country’s economic development.

The bank’s principal function is to offer normal “high street” banking facilities in hard currency to foreign companies, joint ventures, international relief agencies and individuals doing legitimate business in the DPRK.

Daedong Credit Bank was the first bank in the DPRK to introduce, and vigorously implement, a comprehensive set of anti-money laundering procedures. DCB’s anti-money laundering procedure manual was introduced eight years ago, and subsequently updated based on anti-money laundering guidelines provided by the Asian Development Bank. The manual has been sent to, and accepted by, DCB’s international correspondent banks.

Daedong Credit Bank also maintains strict procedures for the detection and rejection of counterfeit bank notes; it uses regularly updated note checking machines, and has personnel with over 15 years of experience of handling notes.

Daedong Credit Bank is strongly positioned in relation to the future economic development of the DPRK, and, being the oldest established foreign invested commercial bank in the DPRK, it is the intention of the bank to capitalise on these advantages.

CONTACT INFORMATION
Daedong Credit Bank office address in Pyongyang is:
Daedong Credit Bank
Suite 401, Potonggang Hotel
Ansan-dong
Pyongchon District
Pyongyang
Democratic People’s Republic of Korea
www.daedongcreditbank.com

Posted in Banking, China, Daedong Credit Bank, Finance, Foreign direct investment, Hana Electronics Company, Insurance, Phoenix Commerical Ventures | Comments Closed

The DPRK and Russia to Discuss Construction of Gas Pipelines

Wednesday, August 24th, 2011

Institute for Far Eastern Studies (IFES)
2011-8-24

Kim Jong Il’s visit to Moscow on August 20 is sparking interest for the future of economic cooperation between the two countries.

According to the KCNA, Russian President Dmitry Medvedev expressed interest to increase trilateral cooperation between the ROK-DPRK-Russia in the gas, energy, and railroad sectors. In the message sent from Medvedev to mark the 66th anniversary of independence from Japanese colonial rule, “plans to expand cooperation with the DPRK and the ROK in gas, energy, and railroad industry” were emphasized.

The cooperation projects are evaluated to have “great economic and political significance contributing to the stability in Northeast Asia and denuclearization of the Korean peninsula.”

In July 4, the KCNA reported that the delegates from the Russian energy giant Gazprom headed by Chairman Alekhsandr Ananenkov visited Pyongyang to discuss energy cooperation, although details of the visit was not elaborated. Ananenkov was reported to have met with North Korean officials in gas and oil industriesto discuss bilateral cooperation in these areas.

Russia has also expressed interest in linking gas pipelines to export natural gas to South Korea via inter-Korean railroad system.

A spokesperson of the foreign ministry of the DPRK reported on the recent visit from the vice-foreign minister and chief representative of Russia on Six-Party Talks, Aleksei Borodavkin, this past March. In the statement, the Russian government expressed concerns for improving inter-Korean relations and stressed prospects of the tripartite economic cooperation projects with North and South Korea including the construction of railways, gas pipeline, and a transmission line linking the three countries. The DPRK also expressed support for the upcoming economic cooperation projects.

In result, the main agenda in the bilateral economic cooperation between Russia and North Korea entails railway, gas pipeline, and transmission line construction.

President Lee Myung-bak has met with the Russian president Medvedev in September 2008 in Moscow. At the summit, the two presidents reached an agreement to pursue projects to export Russian PNG or pipeline natural gas to South Korea through a pipeline via North Korea from 2015.

Immediately following the summit, South Korea’s Korea Gas Corporation (KOGAS) and Russia’s Gazprom signed a memorandum of understanding (MOU) to jointly study the possibilities of constructing a long-distance pipeline running from Vladivostok. Under the contract, Russia will send at least 7.5 million tons of natural gas annually for a period of 30 years through a pipeline to South Korea via North Korea.

This joint study between ROK-Russia is expected to serve as a momentum in bringing diverse economic cooperation between North and South Korea as well.

While it is still premature to judge the long-term outlook for such trilateral economic cooperation, its effects are anticipated to contribute to stability and peace in the Northeast Asian region.

Additional Information: here is a summary of the recent Kim Jong-il — Medvedev summit.

Posted in Electricity, Energy, Institute for Far Eastern Studies, International trade, Natural Gas, Oil, Railways, Russia, Transportation | Comments Closed

Charity aims to feed DPRK children

Wednesday, August 17th, 2011

Pictured Above: Love North Korean Children Bakery (Sonbong, DPRK)

According to the Korea Herald:

When Seoul votes on whether to provide free lunches for school kids here on Aug. 24, many of the 50,000 children living in the North Korean city of Sariwon will likely be skipping their midday meal.

That’s what they are obliged to do most days, says George Rhee, the South Korean minister trying to raise 500 million won ($466,500) to feed them. Rhee, whose father fled the North during the Korean War, already runs three bakeries in the impoverished country, feeding 10,000 children a day through his charity Love for North Korean Children (LINK).

“I have thought of my family in North Korea so many times,” said Rhee, who is now a minister for a South Korean church in London.

“When I got British citizenship in 2002, I visited North Korea for the first time. It was very shocking. There were many children around me begging uncle, uncle give me some food. I am so hungry. I was thinking ‘how can I help such poor children?’

“First of all I was thinking of building an orphanage in North Korea but they said that there are no orphans there because Kim Il-sung is the father of all the children. They disagreed with an orphanage but they suggested a bakery.”

The traditional steamed wheat flour rolls now made at Rhee’s three successful bread factories, located in Pyongyang, Ranjin and Hyangsan, are a perfect product to feed children in a country where even food aid is often suspected to be misappropriated.

“The bread has a very short shelf life compared to baked rolls so they have to be eaten straight away. They cannot be stored and sold on,” he said.

“I have been to North Korea many times and I know that the bread in my bakeries is going straight to the children’s mouths at lunchtimes. I am very proud of that fact.”

On his last trip to the North in June, Rhee visited Sariwon city, around 100 kilometers south of Pyongyang, to view a disused building he wants to turn into his next bread-making project.

The communist country’s Korea Education Fund, called a “non-profit non-governmental funding association” by officials there, has asked Rhee to open the bakery in the city of 200,000 people in Hwanghaebuk Province, requesting a facility big enough to feed all 50,000 children living there.

While he cannot foresee producing so much bread in the near future, he does think he could supply materials for a 250 million won project to transform the derelict site. His charity would then raise 250 million won a year to provide flour to make the 5,000 rolls a day, providing a school meal for all children aged four to seven there.

“We are trying to help them develop the food infrastructure in these small communities. They don’t have anything to feed their ordinary children. We are trying to help them,” said Rhee.

“We can use this 60-year-old building that was used to provide some sweets and milk for children until about 10 years ago, but that work has been stopped now. They are using old buildings for a lot of different purposes, for example they are trying to extract sugar from seaweed they are doing a lot of different things.

“They wanted our ministry to be able to establish a bakery providing their own people with work and help their economy.”

As with the other bakeries LINK has already established in the country, the facility would have flour delivered from China and employ around 15 local staff.

International sponsorship manager Dr. Shirley Vander Schaaf said: “In a lot of ways it is very good because they are trying to decentralize the distribution of food, bringing it down to a community level.

“This would be a change from having it administered from Pyongyang. They seem to be putting the ownership and responsibility back into the communities, which makes sense. They are utilizing the funding and their resources from the NGOS to help them do this.”

The charity which has been registered in the U.K. since 2003 and in Korea since 2006 already has many regular international donors, but is far short of its 500 million won fundraising target to get Rhee’s Sariwon project off the ground and running for one year.

The charity is hoping to hold an 80 km bikeathon from Seoul to the DMZ in October and is asking anyone who is interested in taking part and raising sponsorship to get in touch.

“I think there are a lot of foreigners here who want to do something to help North Korea but don’t know what to do. If they come to us with ideas for fund raising we can work with them to get their ideas off the ground,” Vander Schaaf said.

She is looking to create a fundraising team to help the charity meet its goal to eventually open a bakery in every province in North Korea, making sure fewer children there will have to go without lunch each day.

Michael Rank wrote a story about the Love North Korean Children Bakery in Rason. See it here.

Posted in Food, International Aid, Love North Korean Children | 1 Comment »

Orascom publishes 2nd quarter 2011 report

Sunday, August 14th, 2011

Read the full report here (PDF).

According to the Daily NK:

North Korea’s rapidly burgeoning cell phone user numbers have surpassed 660,000, according to Egyptian operator Orascom Telecom’s half-year earnings report for January-June, 2011.

As of March, the last time Orascom released a similar report, the number of subscribers stood at 530,000, meaning that the company has officially added 130,000 additional users in just three months, an extraordinary performance given prevailing economic conditions, the price of phones and official controls.

The figures look even better over a 12 month period; at the same point last year, there were just 184,531 subscribers. Although things are likely to slow as time passes, this still puts the era of a million subscribers, which would represent around 4% of the population, within sight.

The causes of the rapid increase in user take-up include a rapidly expanding network, that the authorities encourage Party cadres to make use of the phones, and that they are of increasing importance to those doing business in the market. In addition, the company has been working to target young people with a number of additional services including MMS and Video Call.

According to the earnings figures, as a result of these efforts Orascom made $61 million from its North Korea venture in the first half of the year, an increase of 160% on last year.

Commenting on the success, company CEO Ahmed Abou Doma noted, “Our operation in North Korea continues to display tremendous growth with a subscriber base that has more than tripled compared to the first half of 2010, the growth of which impacted revenues which increased 164% year-on-year.”

However, there is another story behind the official earnings that could serve to give investors pause. First, the earnings are based on the official USD exchange rate, 135 North Korean won, instead of the market exchange rate, which stood at far removed at 2540 North Korean won in Pyongyang on August 2nd.

Second, the report notes the introduction of what it calls the ‘Euro Pack’, a bundle which offers new subscribers “voice minutes and VAS in return of fees that could only be paid in Euros”, a concept which Orascom says is proving popular, but which certainly reflects the uncertainty inherent in dealing with the North Korean currency.

Martyn Williams has more here.

At least one report claims that the older mobile phone network (pre-Orascom) has finally been closed down. Now Orascom is the sole mobile phone provider.

Read the full story here:
Orascom User Numbers Keep Rising
Daily NK
Chris Green
2011-8-11

Posted in Cell phones, Communications, Orascom Telecom Holding | Comments Closed

Why North Koreans Deserve Opportunities to Study Abroad

Thursday, July 28th, 2011

Chronicle of Higher Education
Geoffrey See (Choson Exchange)
2011-7-28

In the early 1980s, Theodore Schultz, a Chicago economist and Nobel laureate, visited a China that was just opening up. Impressed by his translator during the trip, he offered the young man an opportunity to attend the University of Chicago’s doctoral program in economics. Thirty years later, the young man, Justin Lin, who helped built one of the top economics department in China at Peking University, became the first chief economist of the World Bank from Asia. Without that scholarship, things might have turned out very differently for Justin Lin, Peking University, and the World Bank.

Today, we have North Korea, an isolated country with young people equally curious about business, finance, and economics, and in a system similar to China’s in the 70s or 80s. On my first trip to Pyongyang, in 2007, a student from Kim Il Sung University, North Korea’s leading university, told me that she wanted to join a trading company to prove that women can be great business leaders. She asked if I could bring economics or business textbooks for her the next time I visited the country. Her example shows there is a hunger for knowledge in the isolated country. And with international-education opportunities, some of these people could become globally integrated and enlightened leaders.

For universities that seek to educate the leaders of tomorrow who will have an impact on the world, supporting North Korean students contributes immensely to this mission. By equipping intelligent and dynamic North Koreans with knowledge and networks, universities can give them an enormous head start in shaping the future of their country.

Choson Exchange, an academic-exchange organization I started, recently selected three talented North Koreans under 30 years of age for scholarships to study business, finance, and economics overseas through a rigorous process. We brought in a managing partner from a top-tier management-consulting company to conduct due diligence to first select high-quality financial, policy, and other institutions with clear emphasis on training young employees. We asked these institutions to nominate young candidates for a scholarship program, and we put the nominees through several rounds of interviews. We were surprised at the quality of the candidates. All three recipients we selected spoke excellent English, and were able to discuss in English the merits of different fiscal incentives and legal structures, or the need for legal reforms in tackling corruption. Two of them spoke other foreign languages.

Perhaps we should not be surprised. North Korean students benefit from a cultural and political emphasis on education. In addition, the dearth of opportunities for North Koreans to study overseas allowed us to pick from a pool of incredibly bright students. For universities competing to lure in high-potential individuals, North Korea provides low-hanging fruit. Unfortunately, many administrators at universities believe, without bothering to meet candidates, that no North Korean could be good enough for their programs.

North Korean candidates will need scholarships. And universities, in this period of cost-cutting, are understandably hesitant in providing scholarships to candidates from a country most people have little interest in. But the two or three places a university can provide amount to an insignificant cost. Even if universities could not care less about North Korea, they should recognize the potential for such a program to attract donor, academic, or corporate interest from South Korea when the political relationship between the two Koreas improves.

Universities undoubtedly will have concerns about such a program. North Koreans are unlikely to be able to apply to universities through the usual process, which will require flexibility on the university’s part in devising an alternative but equally rigorous process. This will probably require creative partnerships with nonprofits or companies in Pyongyang.

Universities are also rightfully concerned that such opportunities will disproportionately benefit the progeny of the North Korean elite, who they might not believe deserve such opportunities. While candidates will likely be upper- to upper-middle class Koreans who have access to the best educational resources in the country, this is not necessarily incomparable to students coming from other developing countries where getting high-quality English education is often the preserve of those with resources. The very richest and most elite of North Koreans (a small pool) do not require scholarships for their sons and daughters. They already send their progeny to France or Switzerland for education.

With a combination of luck, good processes, and a supportive university, perhaps sometime down the road, the next chief economist for the World Bank could come from North Korea. And the person would be able to tell you how he or she changed how business and economics is studied in the country.

Posted in Choson Exchange, Education | Comments Closed

DPRK emulates China’s FDI legal framework

Tuesday, July 26th, 2011

Evan Ramsatad writes in the Wall Street Journal’s Korea Real Time Blog:

Choson Exchange, which has previously concentrated on academic avenues into North Korea, this week published a report on the legal framework North Korea has developed for accepting foreign direct investment.

It resembles China’s structure to a large degree, including requiring that outsiders work with a local business to make an investment and are subject to review by a special commission and potentially other government bodies.

The 14-page report is based chiefly on research from a recent trip to Pyongyang. There, they listened to government officials explain the structure they’ve set up and the places they’d most like to see be developed by foreign investors.

At the top of the list: Rason, the port city in the northeast part of the country that Russia has built a rail line to and China is building a four-lane highway to. Already, Switzerland has reportedly invested in a berth at the city’s port and Norway and other countries helped develop a wind energy project just outside the city.

The report’s conclusion is that North Korea’s foreign investment laws “provide a logical if bureaucratic framework” for foreigners to approach the country. But Choson Exchange said a big ambiguity remains: will North Korea be fair?

To get investor confidence, the group said North Korea “will need to establish a practice of applying and enforcing its laws fairly and consistently, even where the result is not always in the best interest of the DPRK or its state-owned entities.”

The full report published by Choson Exchange can be found on their web page here (PDF). According to the summary:

In June, Choson Exchange took a fact-finding and training needs-mapping trip to Pyongyang. The main impetus for the trip was to get a better understanding of the legal structure that the DPRK has in place to govern inbound foreign investment. We found a legal structure that draws heavily on China’s experiences. Our full findings are in this report.

Key points include:

– Investment projects categorized into encouraged, permitted, restricted and prohibited categories.

– As in China, foreign enterprises require a local business vehicle to conduct FDI; the primary business vehicles available in the DPRK are limited liability corporate bodies and representative offices.

– The JVIC (Joint Venture and Investment Commission) and other government bodies (if applicable) will review the business scope, capitalization and other aspects of a proposed corporate body prior to incorporation.

– Investment in Rason will be particularly encouraged. According to JVIC, corporate bodies established in Rason can also apply to do business elsewhere in the DPRK.

– The operations and governance of DPRK corporate bodies are set out in law, including scope of activities, investment scale, limited liability, location, management, staffing and repatriation of profits.

– Domestic and Foreign arbitration is the primary mechanism for resolving commercial disputes between DPRK and foreign parties.

– Some ambiguities remain. Will laws be enforced uniformly and consistently?

Posted in Choson Exchange, Economic reform, Education, Foreign direct investment, Rason Economic and Trade Zone (Rajin-Sonbong), Special Economic Zones (Established before 2013) | Comments Closed

Official activities of Kim Jong-il centered on economy while Kim Jong-un focused on military

Thursday, July 21st, 2011

Institute for Far Eastern Sudies (IFES)
2011-7-19

Kim Jong Il has made a total of 63 official activities in the first half of 2011, focusing mainly on providing field guidance at economic related facilities. On contrast, only one onsite inspection was given at a military base.

According to an official report from the Ministry of Unification, Kim Jong Il was witnessed to have made 63 official appearances this year thus far, already reaching 80 percent of total activities made last year, a record all-time high in the number of official activities for Kim

Specifically, he has made 28 economic related activities which encompassed 45 percent of the entire official activities. Only 14 military related activities were made, the lowest number ever recorded. Out of the 14 military activities, 9 consisted of attendance at military performances and only one trip was entirely associated with military inspection. Alongside these inspections, Kim also made 7 foreign-related activities.

The monthly breakdown of Kim’s official activities was 15 in January, 11 in February, 9 in March, 13 in April, 10 in May and lastly, 5 in June.

Since 2009, Kim made consistent official appearances and the reports of his official activities were found regularly on a bi-weekly basis, except for June when his activities were not reported for two weeks between 14th to 30th.

Kim is accompanied by several officials on his official activities, in which 54 officials were recorded to have accompanied this year. Kim Kyong Hui escorted Kim the most at 48 times. Following Kim Kyong Hui; Jang Song Taek, vice chairman of National Defence Commission (NDC) accompanied 45 times; Kim Ki Nam, secretary of Workers’ Party of Korea (WPRK) accompanied 43 times; Tae Jong Su, secretary of WPK made 43 trips; Ju Kyu Chang, Director of WPK 38 times; Kim Jong Un, vice chairman of Central Military Committee of WPK 35 times; Park Do Chun, secretary of WPK 29 times; Choi Tae Bok, secretary of WPK, 27 times; Hyun Chul Hae, director of Korean People’s Army 26 times; Moon Kyong Duk, Pyongyang, secretary of Pyongyang City Party Committee 25 times; and lastly, Lee Myong Su, director of People’s Safety Ministry made 25 trips.

After making his appearance at the KWP Convention on September 28, 2011, Kim Jong Un has made a total of 73 official activities, and 35 of these activities took place this year.

In detail, Kim Jong Un made 20 military, 18 economic, and 7 foreign-related activities. Monthly breakdown of activities are 2 times in September, 16 times in October, 11 times in November, 9 times in December, 5 times in January, 9 times in February, 8 times in March, 7 times in April, 4 times in May and 2 times in June.

Kim Jong Un’s activities were chiefly military related in which 86 percent comprised of accompanying senior Kim on his visits to political and military sectors. This is a natural outcome, considering his official position as the vice-chairman of Central Military Committee of WPK. The high number of military activities is in sharp contrast with his father, who began to focus mainly on economic activities since 2008.

The New Year’s Message delivered at the beginning of this year placed “improvement of North Korean people’s lives and development of light industry” as the top agenda for the nation. Correspondingly, Kim Jong Il official activities were mainly economic-related to light industry and agricultural sectors.

Kim Jong Il’s official activities are noteworthy indicator which exhibit the direction of leadership and the changes occurring amongst the main elites

Posted in Institute for Far Eastern Studies, Kim Jong Un, Political economy | Comments Closed

North Korean Economy Watch