On the Kaesong Industrial Zone and international tariffs

March 22nd, 2012

According to Business Week:

Gaeseong, which is within sight of South Korean and U.S. guard posts along the Demilitarized Zone, was developed as a joint special economic zone in 2005 and now employs about 50,000 North Koreans, according to the Unification Ministry in Seoul.

More than 120 South Korean companies, including Daewha Fuel, underwear maker Good People Co. and watchmaker Romanson Co. (026040) paid the North Korean government about $60 million to $70 million last year to cover labor costs for workers, said Park Soo Jin, the deputy spokeswoman at the Unification Ministry. Authorities in Pyongyang then paid the employees in local currency and vouchers, she said.

Trade Minister Bark Tae Ho said on March 14 that he will try to persuade the U.S. and European Union to recognize products made in Gaeseong as South Korean.

Singapore Tariffs
The EU and South Korea have agreed to establish a committee this year to examine the issue, Tomasz Kozlowski, ambassador for the EU delegation in Seoul, said in an e-mailed statement. Aaron Tarver, a spokesman at the U.S. Embassy, said in an e-mail that the trade pact does not include any products from North Korea, including those from Gaeseong, without commenting further.

Singapore has reduced tariffs covering more than 4,000 products from Gaeseong under its bilateral trade pact with South Korea, said Lee Sang Mok, Deputy Director at Korea Customs Service. Some products are also covered by agreements with the 10-member Association of Southeast Asian Nations, India, Peru and the European Free Trade Association consisting of Switzerland, Iceland, Liechtenstein and Norway, Lee said via e- mail and telephone.

The value of output from Gaeseong jumped from $14.9 million in its first year to $402 million in 2011, according to the Unification Ministry. During the past seven years, its production totaled $1.5 billion. That compares with $40 billion for North Korea’s annual gross domestic product, according to the CIA World Factbook.

“The U.S. seems to want more progress in North Korean nuclear and human rights issues before including Gaeseong in FTA,” IBK’s Cho said.

…

Yoo of Daewha Fuel Pump said he plans to spend 1 billion won ($885,000) this year to boost capacity in Gaeseong by 50 percent and forecasts sales to jump to 65 billion won this year from 45 billion won in 2011. His company, which also makes parts in plants in South Korea, supplies automakers including Hyundai Motor Co., Honda Motor Co. and Nissan Motor Co., he said.

The minimum monthly base salary paid by companies at Gaeseong is about $64, according to the Unification Ministry’s Park. Yoo, who was speaking at Incheon near Seoul, estimated labor costs would be 20 times higher in South Korea and three times higher in China.

“The security issue is of course a big risk but every business has a risk,” Yoo said. “Gaeseong has survived all the clashes and threats, including the sinking of a warship and the shelling of a South Korean island”.

Read the full story here:
North Korea’s Gaeseong Pushed for Inclusion in FTA
Business Week
Eunkyung Seo and Sangwon Yoon
2012-3-22

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Posted in Economic reform, Foreign direct investment, International trade, Kaesong Industrial Complex (KIC), Labor conditions/wages, Special Economic Zones (Established before 2013), USA | Comments Closed

Some new CRS reports

March 22nd, 2012

The Congressional Research Service (CRS) is the research branch of the US Congress and the number one information source for congressional staff. CRS is responsible for maintining updated research publications on numerous policy concerns and this year they have published two reports on the DPRK:

North Korea’s Nuclear Weapons: Technical Issues (PDF)
Congressional Research Service
Mary Beth Nikitin
February 29, 2012

North Korea: US Relations, Nuclear Diplomacy, and Internal Situation (PDF)
Congressional Research Service
Emma Chanlett-Avery
January 17, 2012

I have archived these and many other CRS reports on the DPRK here.

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Posted in Energy, Nuclear, USA | Comments Closed

Demographic Changes in North Korea (1993-2008)

March 21st, 2012

Population and Development Review
March 2012
Thomas Spoorenberg and Daniel Schwekendiek

Using the 1993 and 2008 national population and housing census data, this article uses population projection to reconstruct the population trends of North Korea over the 15 intercensal years. The article is structured as follows: a brief history of North Korea over the last 60 years is provided. The 1993 and 2008 census data—population by age and sex, fertility, and mortality indicators—are described and critically assessed. From this censusbased demographic evidence and other existing demographic estimates, the population dynamics of the country is reconstructed prospectively from 1993 to 2008 through population projections testing the plausibility of different population trends. Finally, counterfactual population projections are run in order to estimate (1) the demographic impact of the famine in the 1990s and (2) the human cost of the deteriorating living conditions in North Korea that were widely reported during the 1990s and 2000s.

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Posted in Demographics, Statistics | Comments Closed

Pyongyang Metro Maps

March 21st, 2012

On the Koryo Tours Facebook Page, a customer posted two pictures he had taken of maps of the Pyongyang Metro.  One of the pictures was taken in May 2007 and the other in August 2011:

 

Pictured above: (L) May 2007 map (R) August 2011 Map

The 2007 map looks like this photo I took when visiting in 2004.

Here is a map of the Pyongyang Metro on Google Earth which includes the respective areas of difference highlighted in the above images:

Kwangmyong Station (now closed) is connected to Kumsusan Memorial Palace, where Kim Il-sung and Kim Jong-il are lying in state.

The removal of the four unnamed stations from the 2007 map  (the estimated approximate locations taken from this map) perhaps reflects nothing more than an acknowledgement of reality — that the Pyongyang Metro will not be expanded any further.

Neither the 2007 nor the 2011 map show the Namsan Station (남산역) behind (west of) the Grand People’s Study House:

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Posted in Pyongyang Metro, Transportation | 1 Comment »

DPRK pushes scrap metal collection

March 20th, 2012

According to the Daily NK:

The North Korean authorities have issued orders demanding the collection of 10kg of scrap iron per person in advance of this April’s major national events.

A source from North Hamkyung Province today Daily NK yesterday, “The authorities are shouting about how we must collect more than 10kg of scrap iron per person from factories, schools and homes in every area of North Korea, including Pyongyang.”

Scrap iron collection is not a new idea; North Korea ordinarily carries out similar drives twice a year in spring and autumn. However, right up until last year the amount requested was ordinarily less than 5kg and the policy was not implemented very strictly. People who did not submit their share were simply told to make it up six months later, or in many cases were overlooked completely.

However, the atmosphere this year is different. According to the source, “Our local people’s unit leader is putting strong pressure on, saying ‘don’t come to me with reasons or excuses’ and emphasizing that the authorities will regard not contributing to the celebrations in April as an ideological problem.”

Read the rest of this entry »

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Posted in Light Industry, Manufacturing | Comments Closed

KCNA publishes DPRK SEZ laws

March 19th, 2012

Just a few days after Choson Exchange published a PDF copy of the “Law of the Democratic People’s Republic of Korea on the Rason Economic and Trade Zone”, KCNA published laws on both of its recently announced special economic zones along the Chinese border (Rason and Hwanggumphyong). I have posted both laws below in text-recognized PDF format.

Law of the Democratic People’s Republic of Korea of the Hwanggumphyong and Wihwado Economic Zone
Published by KCNA on March 17, 2012
Download PDF here.

Law of the Democratic People’s Republic of Korea on the Rason Economic and Trade Zone
Published by KCNA on March 17, 2012
Download PDF here.

Here is the original 1993 Law on Rason (in Korean) along with 1999 and 2002 revisions (PDF).

UPDATE 1: See Marcus Noland’s comments here.

UPDATE 2: The Institute for Far Eastern Studies (IFES) published the following…

Details Released for the Law on the Hwanggumpyong and Wihwado Economic Zone
Institute for Far Eastern Studies (IFES)
2012-4-4

North Korea recently announced that the Law on the Hwanggumpyong and Wihwado (Islands) Economic Zone, with seven chapters and 74 articles, was approved by the Presidium of the Supreme People’s Assembly (SPA) on December 3, 2011.

On the same day, the text of the amended Law on the Rason Economic and Trade Zone was also released.

The newly passed law on Hwanggumpyong and Wihwado included the details of the management policy stating,“Management and operation of the industrial parks and designated areas of the Zone shall be undertaken by the management committee under the guidance and assistance of the central guidance authority of special economic zones and the North Pyongan Provincial People’s Committee” and asserted, “Other institutions shall not get involved in the work of the management committee.”

The details of the law are as follows:

Article 1 specifies the objective of the zones is to provide strict guidelines that can contribute to the development and expansion of foreign economic cooperation and exchange. Hwanggumpyong and Wihwado Economic Zone was designated as the “special economic zone of the Democratic People’s Republic of Korea,” under the jurisdiction of North Pyongan Province and Hwanggumpyong Island and Wihwa Island districts.

Article 3 states the development of the Zone was to be carried out regionally and in phases, centered around several industries — IT, light industry, agricultural, commerce, and tourism — in Hwanggumpyong Island and Wihwa Island, and will follow the Wihwa Island Development Plans.

In comparison, the Rason Economic and Trade Zone passed on January 31, 1993, was announced as a development area for high-tech industry, international logistics business, equipment manufacturing, primary processing industry, light industry, service business and modern agriculture industries.

Article 6 on the section for “Promotion, Prohibition, and Restriction of Investment,” specifies that the government will encourage investments particularly in the highly competitive sectors in the international market. In contrast, those investments or business activities that can harm the safety, health, and morality of the (North Korean) people or the environment will be prohibited or restricted.

Article 7 stipulates that management and operation of the zone will fall under the central guidance authority of special economic zones and North Pyongan Provincial People’s Committee. Here, it was emphasized that no other organizations can meddle with management and operation of the zone.

Article 8 covers the interests of the investors, in protecting their property, interest and rights. It states, “The property, legitimate income and invested rights of investors in the Zone shall be protected by the law. The State shall not nationalize or expropriate the property of the investors.”

Article 9 provides guidelines for the protection of personal safety, human rights, prohibition of illegal detention and arrest.

Article 13 (Development Method of the Zone) states that the land in Hwanggumpyong will be leased to companies but will be developed and managed comprehensively. The land lease term is set at 50 years from the date of issuance of the land use certificate, with options for renewal.

Chapter 4 (Establishment of Enterprises, Economic and Trade Activities), considered the core section of this law, indicates the specifics of business activities, from establishment, accounting, taxes, wages, employment, and other technical and administrative contents.

Article 36 is particularly eye-catching, which indicates that priority in employment must be given to North Korean residents and the minimum monthly wage will be determined by the management committee.

Lastly, corporate income tax rate set at 14 percent of the profit will be reduced to 10 percent to those businesses in the sectors encouraged by the state (Article 43).

 

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Posted in Hwanggumphyong and Wihwado Economic Zones (Sinuiju), Law on Hwanggumphyong, Law on the Rason Economic and Trade Zone, Rason Economic and Trade Zone (Rajin-Sonbong), Special Economic Zones (Established before 2013) | 3 Comments »

DPRK demand for overseas training

March 19th, 2012

Radio Free Asia published an article on North Korean demand for overseas training.  Since the article is only available in Korean, however, a very helpful colleague has translated it for me to post here:

It is noted that North Korea is sending government officials and field specialists abroad for training with the purpose of reconstructing the economy following the inauguration of the Kim Jung-un era. Five North Korean technology inspectors recently visited a coal-chemical factory in Shanxi, China. The inspectors observed the process of creating different chemicals using coal and they showed particular interest in the factory’s systematic settings.

Also, early last month, the Energy Preservation Technology Inspection Team, including director-level officials of Science Technology Committee, underwent field training in China on construction materials and architectural technology to enhance energy efficiency.

Agape International of Switzerland (NGO), which facilitated the training, said North Korean government officials observed a Chinese insulation factory, construction company, etc. over the course of 10 days.

Additionally, a team of 30 North Korean railroad specialists participated in a commissioned training program at a Railroad institution in Russia. Recently there has been a great increase in North Korea’s request for training arrangements mediated by International and Nongovernmental Organizations.

According to a source which wished to remain anonymous, the increase is notable since North Korea has had a reputation for declining or canceling overseas training programs even after they have been arranged.

Whether the recent demand and interest for overseas training in economic fields reflects an attempt to improve the fallen economy or not remains to be seen.

Read the full story (in Korean) here:
북, 김정은 등장 후 해외연수에 적극적
Radio Free Asia
2012-3-14

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Posted in Construction, Economic reform, Education, Energy | Comments Closed

Robust bilateral trade and economic cooperation between China and North Korea

March 19th, 2012

Institute for Far Eastern Studies (IFES)
2012-3-15

The economic trade between China and North Korea has been robust since early this year. China’s Ministry of Commerce announced on February 29 that bilateral trade between the two countries just in January 2012 reached 418 million USD, an 18 percent jump over the same period last year. North Korea’s exports to China increased 7 percent to 139 million USD, while imports also increased 24 percent to $278 million USD.

Coal is North Korea’s largest export item to China — totaling almost half of total exports — and the total export sales are roughly worth 70 million USD. In contrast, crab and seafood exports to China were greatly reduced. This can be analyzed as one of North Korea’s measures to stock up on food to provide to its residents for the upcoming centennial birthday celebration of Kim Il Sung on April 15 (otherwise known as the Day of the Sun in the DPRK).

However, North Korea’s rice imports from China this past January plummeted 90 percent against the previous year. China’s Ministry of Commerce announced in the January 2012 Agricultural Import-Export Statistical Report that North Korea imported 614 tons (236,000 USD) in January compared to 18,140 tons (630 million USD) the same month last year, a drop of more than 94 percent. On the other hand, corn imports — the most popular grain import from China — tripled to 1,809 tons (596,000 USD) compared to last year’s import figure of 600 tons (174,000 USD).

Upon evaluation, China’s exports to North Korea appear to have increased one billion USD every three years. Based on the data collected from Chinese customs, the Korea Trade-Investment Promotion Agency (KOTRA) analyzed that China’s exports to North Korea were reported to have steadily increased from 1.08 billion USD in 2005, 2.03 billion USD in 2008, to 3.10 billion USD in 2011.

The major export items of China were crude oil and minerals, machinery, electrical equipment, vehicles and parts, and plastic products. These five categories showed steep growth from 30 to 60 percent against the previous year. Last year, China exported crude oil worth 518 million USD and petroleum products valued 192 million USD, which is a 59.1 percent and 83.4 percent rise, respectively.

In addition, 46.8 million USD of aviation kerosene and 58.31 million USD of aviation gasoline were exported to North Korea. Other export items such as fertilizers (134.4 percent) and grains (71.2 percent) steadily increased every year. KOTRA also confirmed China’s trade with North Korea peaked both in exports and imports last year, and the total trade volume towered at 5.64 billion USD. Last year, China’s exports to North Korea totaled 3.17 billion USD and imports from North Korea were 2.47 billion USD.

Trade regions that demonstrate robust economic activities include not only Dandong and Shinuiju but Hunchun, Rajin-Sonbong (currently being jointly developed) and Yanji (China)-Namyang (North Korea) areas. Trade volumes are increasing centered around these areas with expansion of bilateral economic cooperation projects and import of North Korean underground resources. Yanbian Prefecture put forth construction plans to build a new Tumen River Bridge connecting the two countries from this year, announcing the desire to continue to promote trade and economic cooperation with North Korea.

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Posted in Coal, Energy, Food, Statistics, Trade Statistics | 1 Comment »

Human rights and democratic transition in North Korea

March 19th, 2012

Opening conference of the “EU-Korea Human Rights and Democratic Transition Dialogue Program”
March 20, 2012
National Assembly Members’ Office Building (South Korea)

Recently, the situation of defectors from North Korea has once again been in the spotlight. The outcry against deportations from China revealed once again the humanitarian plight of North Koreans. In light of these events, the Hanns-Seidel-Foundation, PSCORE, NKDB and NKIS, supported by the European Union, are proud to host the Opening Conference of the EU-Korea Human Rights and Democratic Transition Dialogue Programme, “Human Rights and Democratic Transition in North Korea,” on March 20, 2012. Outstanding guests from Europe and Korea will discuss human rights issues and perspectives of democratic transition in North Korea. We would like to cordially invite you to attend this timely conference. Your participation will make the conference more valuable and successful.

Here is a PDF with information on the program.

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Posted in Uncategorized | Comments Closed

Friday Fun: A little bit of everything

March 15th, 2012

1. A valued reader sends in these photos taken in the DPRK:

 

The photo on the left was taken in an elevator. Read all of the regulations–they get better and better.

The photo on the right is an advert for the Pugang Pharmaceutical Factory’s “Kumdang-2 Injection”.  It is your best choice for “Radioactive Damages”.

2. Xinhua (the Chinese state media) reports “Girls dress fashionably in DPRK”. Judge for yourself here: Part 1 and Part 2. Apologies to the female readers that there has yet to be published a “Men dress fashionably in DPRK”.  If such a story is published, I promise to link to it.

Ray Cunningham has a DPRK women’s fashion photo set as well. See it here.

Choson Exchange has some DPRK fashion photos here and here.

3. YouTube user “Tyrlop” has provided English subtitles to many North Korean songs. So far, my favorite is the very catchy “The General Uses Wharp!”

4. Norway launches their first mass games.  Not nearly as impressive as the DPRK version.

5. The Onion reports on the ways that US-DPRK relations are improving [satire].

6. Earlier I posted information on the Unhasu Orchestra’s performace in Paris this week. Listen to the performance here. Watch it here.  It is beautiful.

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Posted in Art, Civil society, Music | 1 Comment »

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