Yonhap
Lee Joon-seung
7/18/2007
A company run by the former head of Hyundai Asan Corp. said Wednesday that it will import agricultural products from North Korea that could open full-fledged overland trade with North Korea.
Acheon Global Corp. said it will import three truckloads of fernbrake, fatsia shoots and dried noodles made from buckwheat and arrowroot on Thursday.
Yonhap
Tony Chang
7/11/2007
A South Korean pharmaceutical association said Wednesday it had provided North Korea with drugs worth about 3 billion won (US$3.25 million) in May in response to a request from the impoverished country.
In February, the North Korean Red Cross Society sent a letter requesting antibiotics, tuberculosis medicine, pneumonia medications, and other basic drugs, the Korea Pharmaceutical Manufacturers Association (KPMA) said.
“Drugs made in the South are precious to us because medicines from China are often fake and not fitting to the North Korean constitution,” the society was quoted as saying in the letter.
The North even requested drugs that have outlived their shelf life, underscoring its urgent need for basic drugs, the KPMA said, adding that it had rejected the request for safety reasons.
In late 2006, the North was hit by an outbreak of scarlet fever, which led to travel bans and school closings, according to reports. The country’s east coast was also reported to have been struck by a series of infectious diseases in January, affecting up to 4,000 people.
North seeks medicine, even if expired for a year
Joong Ang Daily
Kim Young-hoon
7/11/2007
A letter from a Red Cross hospital official in North Korea did not mince words. “We welcome any donation of medicine, even if its expiration date has passed,” the official said.
Moon Kyung-tae, vice chairman of the Seoul-based Korea Pharmaceutical Manufacturers Association, said yesterday the official sent the letter through a civic group, Unification Affairs Research Institute, in February.
The North is willing to take medicine that has expired for up to a year, Moon said, and also was willing to accept responsibility for any problems that might arise.
However, Moon said, “We just cannot do that.”
The association sends about 5 billion won ($5.4 million) worth of medical aid packages to the North every year, but the amount is not nearly enough for what is needed.
In 2005, the South provided support to build pharmaceutical factories in the North, but the facilities could not operate properly due to water and electricity shortages.
The country is extremely vulnerable to epidemics. In October, scarlet fever, which can be treated by taking three pills a day for 10 days, broke out in the North. A significant number of children and the elderly died because they lacked the proper medicine, sources well-informed about the North’s situation said.
Donga
7/11/2007
When natural hazards like floods occur in North Korea, the South Korean government sends “humanitarian assistance.” But it has turned out that the government failed to monitor whether the emergency relief aid was being used appropriately.
The government spent 221 billion won (229 million dollars) from August last year to June this year to help North Korea repair damage from last July’s flood. But the Ministry of Unification said on July 10 that the after-monitoring of its use has not yet started.
After a massive flood hit North Korea last year, the ministry announced a plan to send relief aid to the North. At that time, the ministry pledged to visit the affected areas from time to time and see whether the sent items are used for the right purposes. The pledge has not yet been delivered.
The items that the government sent to Pyongyang via the Korean Red Cross include: 100,000 tons of rice, 100,000 tons of cement, 5,000 tons of iron reinforcing rods, 210 relief machines, 80,000 blankets, 10,000 emergency kits, and medicines.
“While sending the relief aid, Pyongyang conducted the nuclear test, so we had to stop; assistance was resumed this year. Due to this change in schedule, it was difficult for us to monitor the use of the aid. We will continue to negotiate with the North regarding field monitoring and access to their rationing lists,” said one official at the unification ministry.
However, many think that the monitoring, in effect, will be of no use, since the rationing of the relief aid might have already been finished.
After a railway station explosion had occurred in Ryongchon in North Pyongan Province in April 2004, the ministry also sent relief aid such as rice and cement. But the monitoring was done one year after the delivery, drawing criticism from the public.
Some point out that we should strengthen the monitoring of our rice aid, which is provided in return for Pyongyang’s scrapping of its nuclear program.
Seoul and Pyongyang made an agreement to visit three places on the east coast and two places on the west coast to oversee the allocation of aid whenever Seoul sends 100,000 tons of rice. The World Food Program, however, has an office in Pyongyang and monitors whether North Korean officials are making disproportionate allocations to the military.
In the meantime, the government sent 10 billion won (10.87 million dollars) worth of road paving materials to help proceed with the Mt. Baekdu tour project planned by Hyundai Asan and the Korea Tourism Organization. However, its usage has not yet been confirmed.
A total of 16,000 tons of materials were sent to the North in August 2005 and March 2006, but Pyongyang has not responded since July last year. Currently, the project is on hold.
“To push the project forward, we are contacting the North via several channels. But because there has not been any response from the North, we are having difficulties,” said one unification ministry official.
Bloomberg
Bradley Martin
7/10/2007
A black Volkswagen Passat with smoked windows glides down a suburban Pyongyang road. Its license plate begins with 216 — a number signifying Kim Jong-il’s Feb. 16 birthday, and a sign the car is a gift from the Dear Leader.
Even without a 216 license plate, a passenger sedan bestows VIP status in a country where traffic is sparse and imports are limited by external sanctions and domestic restrictions alike.
Just across the border, South Korea is the world’s fifth-largest automotive manufacturer. To an ordinary North Korean, though, a private car is “pretty much what a private jet is to the ordinary American,” says Andrei Lankov, author of a new book “North of the DMZ: Essays on Daily Life in North Korea.”
He estimates there are only 20,000 to 25,000 passenger cars in the entire country, less than one per thousand people.
Discouraging private car ownership is not just a matter of ideology in a communist country, Lankov said in a phone interview from Seoul, where he teaches at Kookmin University. The passenger car, usually black and chauffeur-driven, “is the ultimate symbol of the prosperity of high officials,” he says. They keep the vehicles scarce “so everybody knows they are the boss.”
Measuring, copying
North Korea moved early — shortly after the Korean War, and ahead of the South — to mass produce trucks and 4-wheel-drive Jeep-type military vehicles. Craftsmen took apart imported Soviet tractors, trucks and utility vehicles, measuring the parts to make copies.
The indigenous civilian passenger-car industry, too, mostly made knockoffs of models produced elsewhere. After importing a fleet of Mercedes-Benz 190s, the country produced replicas under local model names into the 1990s. Unfortunately, the domestically-made copies were dogged by reports about “terrible overall quality,” says Erik van Ingen Schenau, author of a new pictorial book, “Automobiles Made in North Korea.”
Lee Keum-ryung, a former used-car trader who defected from North to South Korea in 2004, agrees. The knockoffs came with “no air conditioning, no heater, and they’re not tightly built or sealed,” he says. “If you drive out of the city and return, your car will be full of dust. It’s like an oil-fueled cart.” Lee, 40, uses a pseudonym because he fears repercussions from North Korea.
Slow recovery
Material and energy shortages that accompanied a famine in the 1990s brought state-run factories to a halt. Recovery has been slow, and Schenau said he believes even domestic production of Jeep-style vehicles has been replaced by imports from Russia and China.
Imports have similarly come to dominate what passes for the passenger-car market. Used cars — mostly Japanese-made — are the mode of transit for many members of the new trading and entrepreneurial class that has emerged in the last couple of decades. Under a loophole in the country’s long-standing private-car ban, these vehicles typically enter the country disguised as gifts to North Koreans from their relatives in Japan’s Korean community, Lankov says.
Lee says “a relative abroad” helped him buy his first car when he was 23. “But as an ordinary person, I couldn’t keep it under my name, and I didn’t have a number plate of my own,” he says. “A friend was a high police official with many cars under him. I borrowed a plate.”
‘A very affluent life’
Lee had “a very affluent life” before he defected, importing 10-year-old cars from Japan and selling them both in North Korea and, for a time, across the border in China. “I had money, status,” he says. “I enjoyed everything people my age could have.”
A small passenger vehicle for which his agent paid $1,500 at the docks in Japan would sell for $2,500 to $3,000, Lee says. A bigger car — say, a Toyota Crown — might cost him $4,000 to $5,000; he would sell it for $8,000.
While Japanese trade figures show annual exports of some 1,500 passenger cars, mostly used, to North Korea in 2005 and 2006, the total for this year is zero. After Kim’s government tested a nuclear device last October, Japan placed passenger cars on a list of banned luxury exports.
Perhaps as a sign of displeasure with Japan’s sanctions, Kim ordered most Japanese cars confiscated, according to a February 2007 dispatch by South Korea’s Yonhap news agency. The order, if it indeed was issued, hadn’t been carried out by the time of a May visit to Pyongyang, when a number of Japanese cars could be seen.
German inroads
When a European-made import passes by, it’s often owned by the state, used by high officials and foreign dignitaries. Sweden’s Volvo had a hefty market share in the 1970s; Germany’s Audi and Volkswagen have made inroads lately. Mercedes is particularly well-represented in Kim’s personal fleet of hundreds of vehicles, according to Lee Young Kook, a defector who served in Kim’s bodyguard force.
In a 2003 Yonhap story, Lee said the security-conscious leader traveled in motorcades of identical cars to confuse would-be assassins and generally maintained 10 units each of any model so five would always be road-ready.
With the nation’s access to imports constricted, a relatively new player in the market, Pyonghwa Auto Works, has attempted to fill the gap. The company was created when Seoul-based Pyonghwa Motors, which began as a car importer affiliated with Rev. Sun Myung Moon’s Unification Church, teamed up as majority partner in the 70-30 venture with the North Korean state-owned trading firm Ryonbong Corp.
Kits of parts
The first assembly line was set up in 2002 at the west coast port city of Nampo to produce, from kits of parts, a version of the small Fiat Siena, called the Hwiparam (Whistle) in Korean.
So far, the factory has built about 2,000 cars and pickup trucks, according to Noh Jae Wan, a spokesman in Seoul for Pyonghwa Motors, who said it is the only manufacturer now turning out passenger cars in North Korea. According to a February announcement by Brilliance China Automotive Holdings, Pyongyhwa has agreed to let Brilliance use part of the Nampo plant to assemble Haise minibuses.
While some news accounts have mentioned the possibility that the North Korean cars may eventually be sold in the South, “this will take time,” Noh said in an interview. “It can only happen when the two Koreas reach some significant agreement on trade or other international circumstances change.”
Korea Times
Yoon Won-sup
7/3/2007
Kim Yun-kyu, who stepped down as vice president of Hyundai Asan, South Korea’s operator of inter-Korean business and tourism, due to illegal use of corporate funds in October 2005, is resuming work with North Korea.
Kim set up his own company for North Korean business last year, dubbed Acheon Global Corp., which imported 531 kilograms of caviar from North Korea via the East Coast train on June 21, and entered the Gaeseong Industrial Complex, according to the Unification Ministry.
The importing of the caviar is Acheon’s first business transaction with North Korea, which was finalized by Kim’s aide Yuk Jae-hee, vice president of Acheon and former executive of Hyundai, during Yuk’s visit to Mt. Geumgang in North Korea June 18 to 20.
Kim will visit Mt. Geumgang Thursday, the first time since his resignation, to discuss additional imports with North Korean government officials. His North Korean counterpart is a business association in charge of fisheries.
Kim is reportedly seeking to bring North Korean sand to the South. Accordingly, he visited Gaeseong June 19, and Yuk plans to visit Gaeseong soon for further discussion on sand importing.
However, the two CEOs of Acheon are not likely to meet senior North Korean government officials, though they previously have met with and will, again, meet with working-level officials on inter-Korean affairs, in Gaeseong and Mt. Geumgang.
“Kim got approval from North Korea to visit the country for trade of agricultural and fishery projects, and the discussion has been conducted according to the purpose of his visit to North Korea,” a South Korean government official said on condition of anonymity.
Kim already discussed imports of North Korean fisheries and sand to the South and the establishment of an office in Gaeseong, with Choi Seung-chul, vice chairman of Asia Pacific Peace Committee of North Korea.
In line with Kim’s plan, Acheon signed a contract with the Korea Land Corp. to rent 1,400 square meters of land in the Gaeseong complex.
A building is to be set up there to accommodate restaurants, coffeehouses and other facilities for workers in Gaeseong, but it is not yet decided what kind of facilities will be built by Acheon. A permanent office of Acheon also is likely to be set up in Gaeseong.
Some observers say Kim’s resumed activity may lead to competition with Hyundai Asan regarding inter-Korean business, but the dominant opinion is that the chance is slim for the time being.
Kim led the inter-Korean business with Mt. Geumgang tourism and Gaeseong complex under the confidence of late Hyundai Group founder Chung Ju-yung and his late son Mong-hun, former president of Hyundai Asan. Now Hyun Jung-eun, widow of Chung Mong-hun, leads Hyundai Asan.
Korea Times
Kim Tae-gyu
6/27/2007
A private association composed of South Korea’s major software developers plans to establish software centers in Pyongyang and Gaeseong late this year.
The Korea Software Financial Cooperative (KSFC) said Wednesday that it aims to sign a contract on the centers with its northern counterpart, Samcholli General Corp., this summer.
Such high-profile software companies as Samsung SDI, LG CNS, SK C&C and PosData are members of the Seoul-based association together with about 1,000 other outfits.
“We visited Pyongyang last week and agreed in principle to set up software centers in the capital city and Gaeseong Industrial Park,” KSFC official Kim Seok-hyun said.
“We are now ironing out details. The best scenario is that we ink an agreement in July or August to open the centers late this year,” said Kim who heads the North Korean project.
The envisioned centers will hire North Korean technicians and will come up with various computer programs demanded by 1,000-plus members of the KSFC.
“High-tech employees at the centers will develop software that will be used in the South or shipped out of the country,” Kim said. “The facilities are not symbolic ones aimed at improving the South-North relationship.”
Kim added the contract will be a win-win for the two Koreas that have been divided over the past half-century.
“We will be able to create software at much lower prices thanks to the cheap but experienced work force of the North rather than finding a low-wage platform in other countries,” Kim said.
“In comparison, the North will earn dollars through the partnership as well as give its engineers an opportunity to learn advanced technology,” he said.
In the long run, Kim said the software centers will roll out products, which were ordered by foreign companies to South Korean firms.
This is not the first time that a South Korean company attempted to take advantage of software-producing skills and know-how of the Northern engineers.
KT, the South’s top fixed-line telecom operator, started developing sophisticated software via an outsourcing contract with Samcholli General Corp. in 2005.
Yonhap
Sohn Suk-joo
6/19/2007
An aging fuel pipeline exploded in northwestern North Korea about two weeks ago, killing more than 100 residents there, a South Korean civic group claimed Tuesday.
“On June 9, a fire broke out at a field in Sonchon County in North Pyongan Province and some 110 North Koreans were killed,” Good Friends, a Seoul-based Buddhist civic organization, said in an e-mail newsletter.
The alleged disaster came when a lot of people came out to collect gasoline from the fuel pipe, which burst and spilled fuel. “People collected gasoline in their vessels, pandemonium erupted, and a fire broke out,” the newsletter said.
The pipeline from a chemical company in North Pyongan Province to Taedong County in South Pyongan Province was being used to deliver 200 tons of gasoline across the fields and paddies, according to the letter.
“Gasoline costs about 2,500 won a kilogram in North Korea, so many people jockeyed for position for the purpose of making money and the fire started by accident,” it said, adding that the fire was not contained until the following day.
Seoul government and intelligence authorities said they were still trying to verify the claim.
“If such a big accident happened in Sonchon, the news might have spread outside already. I haven’t heard about it yet,” a Unification Ministry official said.
Joong Ang Daily
Hwang Young-jin
6/19/2007
Trade volume between North and South Koreas has increased more than threefold since the historical June 15 Declaration in 2000.
With an average increase of 24.3 percent, annually, the total amount will reach $1.7 billion by the end of the year, according to the report on inter-Korean Trade from the Korea International Trade Association, also known as KITA.
Annual trade volume in 2000 was $425 million, which increased to $1.3 billion last year. Trade volume so far this year until May has already reached $563 million, which is a 31.3 percent increase year-on-year.
Besides the overall growth, what is healthy about the trade quality is that commercial trade accounts for almost 70 percent of the total trade. That figure was below 60 in 2000, according to the report. Non-commercial trade refers to aid including items such as rice, clothing and fuel. In other words, they are products that were sent to North Korea free of charge.
“The success of the Kaesong Industrial Complex is the biggest reason [for the rise],” said Roh Sung-ho, head of the Inter-Korean trade support team at KITA. “We are accepting bids for additional space at the Kaesong complex, and three times more companies bid than there are lots available.”
With more and more companies establishing factories in Kaesong, more material is exported from the South, and more manufactured goods return, said Roh.
The value of goods leaving South Korea was higher than the value of goods returning. However, about 30 percent of those goods were aid and were given free of charge. When that is taken into account, the North made more money from its exports to the South than the South made in exports to the North.
This allows the North to record a profit in trade account books.
“The nuclear incident last year, didn’t affect inter-Korean trade. There might be minor falls, but I expect trade volume between the two Koreas to increase for the time being,” Roh said.
Daily NK
6/14/2007
At the North and South Korea’s agricultural cooperation-related symposium sponsored by World Vision, in commemoration of the opening of the North Korea Agricultural Research Institute (Chief Park Hyo Geun), the Senior Researcher of Korea Rural Economic Institute Agricultural Researcher Kwon Tae Jin emphasized, “North Korea’s action, while ignoring the reality of aid organizations, of requesting or intervening in aid for development is an action which ignores international norms and processes.”
Researcher Kwon did acknowledge the necessity of change from an emergency aid form to aid for development.
However, he insisted, “If it is doubtful whether or not North Korea, while requesting a conversion to aid for development, is truly prepared to receive development aid, then the propriety of such aid and transparently showing the goal and content in addition to the process and means of monitoring as well as institutional equipping for evaluating the results should take place.”
Researcher Kwon pointed out that support to North Korea has played a positive role in preserving supply and demand of food provisions and the open and reform of North Korea, but the problem of not providing sufficient information to patrons and the failure to promise transparency has been exposed.
Further, regarding support for North Korea, he maintained that our government has caused tension by pursuing aid projects while failing to solidify the chemistry of citizens and choosing means of pursuing projects sporadically according to political reasoning.
On one hand, Researcher Park Hyo Geun pointed out, “The principal issue of North Korean agriculture is that the poor are not able to escape the cycle of poverty. The weakening of productivity of labor is sustaining the cycle of poverty of the destitute.”
Chief Park pressed, “When the February 13 agreement is actualized and the North Korean nuclear issue becomes resolved, domestic support for North Korea will increase epochally. The influence that support for North Korea will have on South Korea’s agricultural industry should greatly be considered.”
Daily NK
Han Young Jin
6/11/2007
Recently, portraits of Kim Il Sung, Kim Jong Il and Kim Jong Sook (Kim Jong Il’s mother) wearing military clothing are being sold at North Korea’s black market, Jangmadang.
“Good Friends” a North Korea support organization, published a newsletter which informed that a portrait of the “3 Generals portrait” was being sold for 7,500 North Korean won (approx. US$2.50) at Jangmadang.
The sale of the “3 Generals portrait” is actually prohibited. Then, how did portraits of the “3 Generals” end up on the black market? Is this a sign that the value of Kim Il Sung, Kim Jong Il and Kim Jong Sook has plummeted to rock bottom? No way.
In the past, this portrait of “Baekdu Mountains 3 Great Heroes” or otherwise known as the “3 Generals,” was distributed to North Korea’s elite class. However, as the power of money slowly took a stance in North Korea, the “3 Generals” somehow managed to appear in the markets.
People purchasing the portraits are not the elite class. If a person visits the home and sees this portrait hung, they may get the impression that the household was closely related to the elite class. In other words, the home looks as if it has value or is important, hence the demand at the markets.
The sale of Kim Il Sung, Kim Jong Il and Kim Jong Sook portraits in North Korea is a political offense. If a person is caught selling any portraits, they may end up in a political concentration camp.
However, as people thrive off trade and the value of money spreads throughout the nation, life continues abundantly as long as you don’t get caught. The fact that this item has appeared at Jangmadang just goes to show how much trade as prospered in North Korea.
Further, the source and owners of the portraits are the elite and with a little investigation one can unveil the corruption that is occurring amongst the upper class. As a result, as long as you do not spread rumors about the National Safety Agency and affiliated persons, authorities let you go unnoticed.
The painting is a family portrait with Kim Il Sung dressed as a Chief general on the left, Kim Jong Il dressed in a general’s outfit in the middle and then on the right, Kim Jong Sook dressed in a guerilla uniform.
The “3 Generals’ portrait” first appeared in 1997 about the time of Kim Jong Il’s 55th birthday. At first, the painting was distributed to officers of power including elite officials, generals, courts and the national security and safety agency. The portrait was not presented to average households and hence the “3 Generals” gained its elite status. “We have the 3 Generals in our home” children would say bragging to others.
Nonetheless, this portrait began to be sold on the markets illegally from 1997. This was a time where people died of starvation and Kim Jong Il went around proclaiming “Military First Politics.” Distributing the “3 Generals’ portrait” was all a part of Kim Jong Il’s propaganda for “Military First Politics.”
In the beginning, administrative officers bribed authorities with alcohol and cigarettes in exchange for the portraits. Factory managers would even exchange the goods in the factories and hang the portraits in their own homes. It was not too difficult to obtain the painting if you were closely affiliated to persons with any sort of power including the authorities, military or the government.
Since then, it was common to see the portraits in the homes of the rich. This portrait worth 3,000won in `97 has now escalade to 7,500won following the July 1st economic measure in 2002.
Sale of the portraits began at the place of manufacture Mansudae Art Institution (the national art academy, which is mainly creating works related to Kim Il Sung and Kim Jong Il). The moment rations were suspended, workers at Mansudae Art Institution began to produce extra portraits and badges of Kim Il Sung, and as a means of survival traded these portraits in exchange for food. With ties to relatives in the country, manufacturers sold portraits of the 3 Generals through the back door.
In additional to this, it is common practice that badges of Kim Il Sung and Kim Jong Il are sold on the black market. There are many badges which vary according to class from badges in the shape of a flag (used by overseas North Koreans) to badges made for authorities and a special badge that was manufactured after Kim Il Sung’s death.
One badge, sold for 1,000won
At first the badges were distributed to elite officials and upper class and then slowly, more and more average citizens tried to obtain one. For example, in the mid-90’s it was rare to see the ‘couple badge’ in the country that it sold for 1,000~1,500won (approx. US$0.3~0.5) each. Accordingly, the cost of the badges has also been affected by market prices.
Dealers who sell the badges appear at the black markets wearing a black jacket. The portraits are hidden beneath the jacket and buyers haggle with the dealer for a good price.
However, not everyone likes the “3 Generals portraits.” A defector who recently entered South Korea said, “Only people who can afford the pictures are interested in buying the “3 Generals portraits.” Otherwise, the average commoner doesn’t care.”
Nevertheless, what would happen if Kim Jong Il found out that the portrait of the “3 Generals portraits” were being sold on the black market? Furthermore, what would happen if he found out that the portraits were being sold for a mere $2.50? He would most probably make an order to close Jangmadang.
If not for the living and trade of average commoners, it would be best for Kim Jong Il not to know this fact. It would be better for Kim Jong Il to be ignorant of this rather humiliating truth.
