Figure-skating in the DPRK

February 12th, 2009

Dreams of a North Korean Kim Yu Na
Daily NK
Yoo Gwan Hee, from South Pyungan in 2008
2/12/2009

One of the things people tend to notice about South Korea is the number of athletes who proudly represent the country on the international stage. Besides the Olympics or the Asian Games, a variety of international sporting events are held here. It is a good thing to have world-class athletes in a country, and Kim Yu Na, the figure-skating fairy, is just such a person these days in South Korea.

When people hear the story about Kim Yu Na, they almost always ask me, “Is there figure-skating in North Korea?” Of course! Although they may not be as well-known as the judo athlete Kye Soon Hee or the track star Jung Sung Ok, there are accomplished figure skaters, even professional teams, in North Korea.

In commemoration of Kim Jong Il’s birthday (February 16th), the “supreme holiday for the people,” the “Mt. Baekdu Cup International Figure-skating Celebration” has been held every year since February 1992.

After the “March of Tribulation” in the mid-1990s, North Korea ceased supporting most of the international events that it had been sponsoring, but has put on the “Mt. Baekdu Cup” celebrations without fail. 2009 heralds the 18th consecutive commemoration.

The “Mt. Baekdu Cup” celebration, in conformity with the rules of the International Skating Union (ISU), has four main categories–men’s and females’ singles, pairs skating, and ice dancing. Including participants from the North, the host country, athletes from Russia, Hungary, Belarus, Ukraine, and other former East European Communist nations, and a portion of other European countries also take part in the event.

The event has always been held at the “Pyongyang Skating Rink” in the Botongkang district in Pyongyang. Having opened in April 1982, it accommodates up to 6,000 people and is the largest ice rink in the country. It also opens to general Pyongyang citizens on holidays.

Figure skaters in North Korea are usually associated with the National Joint Athletics Team, the Pyongyang Athletics Team, and the Walmido Athletic Team. Most of them are Pyongang-born. Because skating rinks are not so common in North Korea and figure skating requires professional training, children from the Youth Physical School, who belong to the Pyongyang Skating Rink or the Pyongyang Locomotive Athletic Team Skating Rink, are chosen.

Among the trainers, some of them are former figure skaters, but others have dance backgrounds. Just as Kim Yu Na learned ballet to help with her “expressiveness,” North Korean figure skaters also learn to dance.

Reflecting the general reality of the education system in the North, figure skaters also mostly come from affluent homes. In order to train, they have to eat well, first and foremost, and have to be able to afford not only the necessary items for training, but also compensations to trainers, such as liquor, cigarettes, or means of living. In particular, before entering professional teams, parents are in charge of all costs, which is a difficult burden for average households.

The athletes lead group-based lives in the teams to which they belong. During training, if there is evidence of some kind of a flaw or poor results, then self-criticisms or ideological education is stressed.

Among North Korea’s figure skaters, none are as internationally renowned as South Korea’s Kim Yu Na. Looking at the individual rankings announced by the ISU on the 7th; the only ranked North Korean skaters are the pair Tae Won Hyuk-Lee Ji Hyang (the 83rd). The reason for their low ranking, apart from their actual skill, can be attributed to their participation in only one international competition sponsored by the ISU in the last three years.

Han Jung In, who was a flag-bearer alongside South Korean female speed skater Lee Bora in the 2006 Torino Winter Olympic Games, was also a famous male figure skater in North Korea. As for female skaters, there is Kim Young Sook, ranked 96th in the world last year.

The background music used by North Korean figure skaters is always revolutionary song. Consequently, the audience at the international competition fails to understand the music. The athletes who participate in the “Mt. Baekdu Cup” celebration have to select songs that demonstrate devotion to and adoration for Kim Jong Il. Sometimes, the lyrics of songs, such as “February is spring,” a very well-known song admiring Kim Jong Il, are removed and only the tunes are used.

Wanting a star such as Kim Yu Na to emerge from North Korea is something that may have to wait until the next generation. Asking North Korean children, who struggle for survival, to show sporting potential is most unfair.

In Pyongyang nowadays, countless students from pre-school to high school are preparing for a commemorative performance, “Arirang.” While Kim Yu Na is realizing her dream of being the world’s top figure skater, Pyongyang’s children have to prepare several months for a performance, the purpose of which is to promote the regime and earn foreign currency.

I hope the day comes soon when North Korean children can follow their dreams, like Kim Yu Na, without any political or economic restraint.

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North Korean defectors learn media isn’t always best guide to life in South

February 11th, 2009

Herald Tribune
Lee Su-hyun
2/11/2009

After she defected here from North Korea in 2006, Ahn Mi Ock was shocked to learn that most South Koreans lived in small apartments and had to struggle to buy one.

Ahn, 44, had fully expected that once in the South she would enjoy the same luxurious lifestyle portrayed in the television dramas she had watched on smuggled DVDs. It had not occurred to her that the fashionably dressed characters sipping Champagne in the gardens of stylishly furnished houses were not, well, average South Koreans.

That disappointment aside, she and many other North Korean defectors find themselves plunging into the unaccustomed wealth of South Korea’s entertainment and news media, fascinated by the astonishingly free flow of information and critiques of political leaders, but also searching for tips as to how to navigate this strange new society.

“When I first came here, I was glued to the TV screen every waking moment,” said Ahn, a former art teacher who now works in a restaurant.

Most newly arrived North Koreans spend up to three months at government settlement centers, taking crash courses in capitalism and democracy. They are also taught basic skills like how to use ATMs and home appliances.

But many say they still feel insecure about moving into the real world. With no previous exposure to a free press and 60 years of separation between the South and the North, they sometimes feel they are speaking different languages.

“I was so surprised when I first saw a music video here and didn’t understand a word of a rap song – in Korean,” said Yu Chong Song, 27, who is studying Chinese at Dongkuk University.

That’s where close study of South Korean media comes in.

Recent defectors say that in North Korea, the typical resident might watch half an hour of television news about how Kim Jong Il, the national leader, spent his day. They might spend another hour watching popular dramas, often involving the fate of the nation – assuming the electricity supply allows.

As for newspapers, the 20 former North Koreans interviewed said home delivery was only for the privileged. Those who did have access said the contents were boringly predictable, and that a better use of newsprint was for rolling cigarettes.

But in their first 6 to 12 months in South Korea, they said, they spent at least three hours a day watching television: talk shows, reality shows, quiz shows. (When they first arrived, they had few acquaintances and no jobs, and so had a lot of time on their hands.)

They said they paid closest attention to news and dramas, because they thought these provided the most useful portrayals of South Korean society. The hope was that by using television to study the differences between the two countries before daring to face actual South Koreans, they could reduce the chances of embarrassment.

Kim Heung Kwang, 49, a former computer science teacher who now works in an organization that finds jobs for defectors, said it was only by watching a television movie that he learned that a host should offer his guests a drink.

“Not only must I offer something to drink,” he said, “but ask if they want coffee or tea and whether they want sugar or milk, and then how many spoonfuls.”

Still, there are limits on media study as a learning tool. It is not always clear how much of what they are viewing is truly representative of South Korean life, and how much is fantasy.

“I stopped watching television dramas, because it was getting in the way of my relating to the South Korean people,” said Kim Heung Kwang, who said he still was not sure whether South Korea was a place where mistresses were bold enough to tell their lovers’ wives to get lost.

Ahn, for her part, was concerned about how her 19-year-old daughter might cope with the lust-consumed South Korean men, who apparently devote much of their daily routine seeking unencumbered romance – or so television dramas had led her to believe.

To alleviate their confusion, a Newspaper in Education program to encourage young people to read was introduced a year ago at Setnet High School, an alternative school for North Korean defectors. There, they can ask an instructor to explain concepts they encounter in newspaper pages.

“What is business and sales?” asked Park Jeong Hyang, 18, during a Setnet class.

“Amateur? Is that something to do with sports?” asked Mah Gwang Hyuck, 23.

“Can you explain what marketing is again?” asked Kim Su Ryun, 18.

Especially troublesome are the loan words, mostly derived from English, used in almost every sentence, and South Korean words not used in the North. But perhaps even more difficult to understand is the media’s role in South Korea.

The defectors express shock that the media can point a finger at a head of state. “I don’t know how President Lee Myung Bak can continue running the country after getting so much criticism,” said Cho Eun Hee, 23, a Setnet student.

All those interviewed agreed that freedom to challenge the government is desirable but felt uncomfortable seeing so much of it.

“Television even broadcasts scenes of politicians fighting in the National Assembly. That can’t be good for the image of the country,” Ahn said.

Still, Kim Heung Kwang saw some merits. He was impressed to see his modest apartment complex featured in a television news report about tenants of a nearby prayer house complaining about construction noise. He was familiar with the dispute and felt the reporters were relaying the facts fairly.

Cha Eun Chae, 20, said that in North Korea, there was no way of knowing how the economy was performing, because every story was upbeat: “They would always say, ‘The harvest was good this year.’ But we saw our neighbors starving.”

Over time, as the newcomers learned to read and understand them, the local media became more relevant to their everyday lives. Noticing that self-promotion is important in South Korea, one university student aspiring to a career in business scrutinizes newspaper columns and editorials for hints.

“I want to learn how to articulate my ideas while accommodating others’ opinions,” he said. “And I see that in the way editorials here are written – for example, on the controversy over embryonic cloning.”

Not everyone succeeds in applying media models to interaction with South Koreans.

Kim Keum Hee, 38, who works as a cleaner at a public bathhouse, tried to mimic a hotelier she had seen in a television drama.

“But I just couldn’t do it,” Kim said. “I’m still not used to being friendly when I don’t mean it.”

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Mass Games to be repeated in fall 2009

February 11th, 2009

According to a recent email from Koryo Tours, the DPRK plans to repeat the Arirang Mass Games performance in August-September (and possibly October). According to the email:

We have been informed by our partners in Pyongyang that they fully expect the Mass Games of 2009 to go ahead during the period of August to September (and possibly on into October as usually happens), this news is not totally confirmed (we will keep you updated) but we have full confidence that the event will take place and as a result are scheduling tours to witness this spectacular performance in the May Day Stadium in Pyongyang, North Korea.

For those of you who have travelled with us before do drop us a line as we can arrange a ‘second timers’ tour to include new tour sites. During the Mass Games period we have trips to the east cost (North Korea’s Costa del Sol) and to Mount Paekdu and Mount Chilbo.
 
American tourists will also be welcome in North Korea at this time of the year (US citizens can only obtain tourist visas when the Mass Games are on) and so as usual we have designed a full range of tours specifically for Americans. As with previous years the DPRK will likely enforce a time limit on US tours of 4 nights and also restrict American tourists to only enter and depart the country by plane, if however the opportunity to stay longer and to take the international train arises we will of course alter our tours to allow that option to be taken by anyone who wants it.

If you are interested in touring the DPRK this summer, visit the Koryo Tours web site here.  They also offer a tour of Turkmensitan which is worthwhile!

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Remittances to DPRK grow

February 10th, 2009

From the Choson Ilbo:

The number of North Korean refugees who remit money to their families in the North is rising. “Some 15,000 North Korean refugees have settled in the country, and over 6,000 of them are remitting money to North Korea,” a government official said. “We understand the size of the remittances is also growing.” An official with a refugee organization said there must be more than 10,000 who remit money to their families in the North.

If some 6,000 North Korean refugees here send money North, and a refugee remits US$1,000 a year, some $6 million is sent to North Korea per year. To that should be added 20,000-30,000 of the 100,000 North Koreans estimated to live in China.

Remittance routes are clandestine. Money is remitted to a Chinese broker, who contacts another in North Korea, who pays the recipient with his own money and settles the account with the Chinese broker later, leaving no documentary trail.

Currencies are usually American dollars and Chinese yuan. Commissions range between 15 and 20 percent, according to sources. “Remittances through brokers designated by North Koreans generally reach the recipient without a hitch, but Chinese brokers contacted in China are liable to steal the money,” a refugee said. The brokers handle tens of millions of dollars and are linked to organized gangs.

In the past, remittances required enormous bribes. First a man had to be sent to North Korea to bribe guards, with commissions exceeding 40 percent. But with the emergence of remittance brokers and the establishment of an organized system, the amount of money that reaches North Korean families has increased substantially.

The North Korean won is practically worthless in international exchange. A North Korean workers’ average salary was between W2,500 and 3,000 as of the end of 2008. Given that US$1 is traded at W3,200, $1,000 is the equivalent of 100 years’ worth of earnings and buys two apartments in places like Chongjin, North Hamgyeong Province, or Hamhung, South Hamgyeong Province.

In the past, the DPRK has promoted remittances—particularly to Koreans repatriated from Japan and their families.  The DPRK government then extracted its share of these funds by offering western goods for sale in hard currency shops at inflated prices.

The DPRK could do worse at promoting its legitimacy than to adopt the same policy in regards to remittances from every other country.  If the DPRK allowed remittances to flow through official channels, the government could simply extract a service fee equal to or slightly below the black market rate.  That is a win-win (except for the smugglers).

UPDATE: Japanese goods were (are?) historically sold at the Ragwan Deaprtment Store next to the Changwang Hotel (North-West of the Central District).

Another point to consider is the unfortunate role of politics in preventing the adoption of efficiency-enhancing economic reforms.  In the case of remittances, the DPRK would certainly have political problems with letting defectors send money to their relatives back home.  Under this particular constraint smuggling might be the next best option.  Since the operation is clandestine, the government does not have to acknowledge it exists, yet at the same time people can receive their remittancs and (some part of) the governance structure collects “taxes”.  

What “taxes”? The few people who are carrying out the financial transactions will have pay decent protection money to a sponsor high in the food chain.  The work is risky for numerous reasons, but we know some important people are behind it becuase the operation requires managers to keep enough hard currency on hand to cover the monthy/anual remittance payments from 6,000+ defectors. 

Read the full article here:
Refugees’ Remittances to N.Korea ‘Growing’
Choson Ilbo
2/10/2009

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2008 DPRK won exchange rate

February 7th, 2009

(Hat tip to One Free Korea)—According to Open Radio for North Korea, the DPRK won experienced a significant devaluation against to the dollar in the latter half of 2008:

dprk-prc-us-er-2008.jpg

According to the table and the article:

In 2008, North Korea’s exchange rate has shown relative stability of 3200 Won per Dollar and 460 Won per Chinese Yuan.

However, in December 2008, the exchange rate started to skyrocket.  The exchange rate in December was 3630 won per Dollar and 530 Won per Chinese Yuan- which was approximately 13 to 15 percent increase from the month before.  The exchange rate fell slightly to 3540 Won per Dollar and 530 Won per Yuan in January.  Nonetheless, the exchange rate isn’t likely to decrease further.

The sudden rise in foreign currency exchange rate in December seems to have correlation with the Chinese restriction on North Korean imports.  According to Chinese and North Korean traders, the sub par quality of imported products from China (speculated to be food products with melamine) was the origin of the Chinese restriction.  Sporadic breakout of illnesses in various regions of North Korea caused general distrust over Chinese imports, and the North Korean government relayed the complaints to Chinese authorities.  China in turn took a chauvinistic approach and unilaterally regulated trade between China and North Korea to teach North Korea a “lesson”

Nearly 50% of North Korean trade is with China.  Therefore, regulation on trade between North Korea and China, especially on North Korean exports to China inevitably has a severe impact on foreign currency market in North Korea.

For comparison I put together a table of the US$-RMB exchange rate during 2008 (interbank spot rate) using FX history:

usd-rmb-er-2008.JPG

So now we can conclude that in 2008 the Yuan appreciated against both the DPRK won and the and the US dollar, and that the US dollar appreciated against the DPRK won. 

So the next question is: how efficient are the currency markets which trade DPRK won? Doing some back of the napkin calculations using data from these two different sources (the story and FX History), I seem to have reached the conclusion that the DPRK won is traded rather efficiently.

The average RMB/USD exchange rate (interbank spot) in December 2008 was 6.86 RMB/USD (from FX history).  If you converted 686 RMB into USD, you would receive $100.  If you converted US$100 into DPRK won at the 3,630 rate in the story quoted above, you would receive w 363,000.  If you exchanged those won for Chinese RMB at the 530 rate quoted in the story, you would receive 684.90 RMB.  684.90 is 99.83% of 686

That seems too good to be true.

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The USSR’s market for used lightbulbs

February 7th, 2009

Writing in Marginal Revolution, Tyler Cowen points out a rather unique market in the Soviet Union—the market for burned-out light bulbs:

For most of us, it is hard to fathom the rationale for a market in burnt-out light bulbs. But in the scarcity-driven Soviet economy, the market was entirely reasonable. Light bulbs were rarely available to individual consumers, but were obtainable for state-sponsored activities. Thus, it would be difficult to purchase a light bulb for a new lamp in one’s home, while burnt-out bulbs in state-run offices or factories were routinely replaced. So if someone purchased a new lamp and needed a bulb, he would buy a used light bulb for a small fee and replace a functioning bulb at work with the dud. He would then take the functioning bulb home for the new lamp, while the burnt-out bulb at the office/factory would be replaced with a new functioning bulb. Meanwhile, the maintenance person at the office/factory would take the used bulb and sell it on the used light bulb market.

I have no problem believing similar markets exist in the DPRK.  If any readers from current or formerly communist countries have similar stories, please add them in the comments.

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Kim Jong il nominated to run for SPA

February 6th, 2009

UPDATE: From the Institute for Far Eastern Studies:

The 12th election of representatives for the North Korean Supreme People’s Assembly, scheduled for March 8, and the opening of the session of the 12th SPA, expected to occur in late March or early April, will mark the launch of the third government under Kim Jong Il

Kim Jong Il was elected to his current position of NDC chairman by 10th SPA in 1998, and was reelected in 2003 by the 12th SPA. In those cases, as well, the Constituency No. 333 announced his nomination. It is expected that all other election constituencies across the country will begin holding celebratory events for Kim soon in order to disseminate propaganda portraying Kim as the representative for all the North Korean people.

Over at One Free Korea, Joshua points out KCNA’s gushing coverage of Kim Jong il’s nomination as a candidate in the upcoming elections for the Supreme People’s Assembly :

Pyongyang, February 4 (KCNA) — Upon hearing the news that General Secretary Kim Jong Il was nominated as a candidate for deputy to the 12th Supreme People’s Assembly at Constituency No. 333, the entire army and people are full of great happiness and pride of having the peerlessly great man as the leader of the nation.

Anti-Japanese revolutionary fighter Hwang Sun Hui said that the anti-Japanese revolutionary fighters were very happy to hear the news. She went on:

A few days ago the officers and men of the People’s Army nominated Kim Jong Il as a candidate for deputy to the SPA with boundless reverence. This is the unanimous will and ardent desire of the entire people.

On receiving this happy news with the February 16, the greatest holiday of the nation, ahead, I can hardly repress the swelling emotion.

We anti-Japanese revolutionary fighters will uphold the leader’s plan of building a great, prosperous and powerful nation in the van of the people.

Vice-premier of the DPRK Cabinet Thae Jong Su, noting that having nominated Kim Jong Il as a candidate for deputy to the SPA this time again is the unanimous will of the entire army and people and a great auspicious event of the nation, said:

Kim Jong Il has been leading the Party and the revolution along one road of victory for scores of years, thus performing great feats which will remain immortal in the history of the country.

He is the peerlessly great man who has defended firmly and developed in depth President Kim Il Sung’s Juche-oriented idea and line on state building and demonstrated the dignity and might of the DPRK all over the world with his original Songun politics.

All the officers and men of the People’s Army and the people came to have as a firm faith through life that he is the destiny and future of our country and nation and the symbol of all the victories.

Needless to say, the coverage from Singapore is far more sober and satisfying:

NORTH Korean leader Kim Jong-Il was Sunday nominated to run in next month’s parliamentary elections, a requirement if he to stay on as supreme army commander, a South Korean official said.

Elections for the rubber-stamp Supreme People’s Assembly should have been held last year, but did not go ahead amid reports that the 66-year-old Mr Kim suffered a stroke in August. They are now set for March 8.

He is legally required to be a lawmaker in order to be eligible to serve as chairman of the powerful National Defence Commission, which runs North Korea’s 1.1-million-strong army. It is in this capacity that Kim rules the country.

South Korean unification ministry spokesman Kim Ho-Nyoun told AFP that the North’s state television reported that Kim had been nominated to run in the 333th district for the polls.

Candidates are picked by either the government or the ruling communist party, and it is common for only one candidate to run for each electoral seat.

In the last elections in 2003, the North Korean media boasted a 99.9-percent voter turnout and 100-percent support for every candidate.

A new assembly usually reaffirms his chairmanship of the National Defence Commission, and brings a reshuffle of the cabinet and military leadership, the officials say.

Some analysts in Seoul have forecast the elections also may bring changes to North Korea’s leadership, in preparation for a post-Kim era.

Read the full story here:
NKorea’s Kim to run in polls
AFP via Stratits Times
2/1/2009

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Orascom update: 6,000 in 2 weeks.

February 5th, 2009

Martyn Williams writes in The Standard:

Koryolink, the North Korean 3G cellular network established in mid-December by Egypt’s Orascom Telecom, has attracted several thousand subscribers in the first two weeks since it began accepting applications in January.

“We didn’t start sales until about two weeks ago,” said Naguib Sawiris, chairman of Orascom Telecom in a telephone interview. “So far we have about 6,000 applications. The important point is that they are normal citizens, not the privileged or miliary generals or party higher-ups. For the first time they have been able to go to a shop and get a mobile phone.”

Orascom has a single shop in Pyongyang and is in the process of expanding its sales network, he said.

But while Koryolink’s first customers might not have high-profile official jobs, they are among the more wealthy in society and price, particularly of the handsets, stands as an obstacle to greater penetration.

“The price is quite high,” said Sawiris. “The government has put a big tax on handsets and it’s making it difficult for everyone to participate but we are having negotiations with the government to reduce that.”

The handsets Koryolink is offering, localized Korean versions of phones from China’s Huawei, cost between US$400 and $600 after the government levy has been added and there’s also calling charges.

The cheapest subscription costs 850 North Korean won per month. That’s about US$6 at the official exchange rate but only 24 cents at the current black market rate used by many citizens and traders. Calls on this tariff are charged at 10.2 won per minute. The highest package costs 2,550 won per month and call rates are 6.8 won per minute.

But all calls can be monitored:

With the launch of the Koryolink network the state continues to have the ability to monitor what its citizens are saying and can eavesdrop on calls if it wants, said Sawiris.

“That’s the right of the government,” he said.

How long to get the project moving?

It took about a year from that initial contact to reach an agreement and another nine months to get the network installed.

“We were quite worried about 2 things: the time it would take and the fact that they would really let normal citizens purchase lines.”

The full article is worth reading here:
North Korean 3G service attracts 6,000 in 2 weeks
The Standard
Martyn Williams
2/5/2009

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North Korea – last in economic freedom in 2009

February 5th, 2009

The purpose of these types of indexes is to put pressure on world governments to improve their economic policies.  Unfortunately, the DPRK has come in last place for as long as I have been paying attention….

From the 2009 Index of Economic Freedom:

econ-freedom2009.JPG

North Korea’s economic freedom score is 2, making its economy the least free in the 2009 Index. North Korea is ranked 41st out of 41 countries in the Asia-Pacific region.

North Korea does not score well in any single area of economic freedom, although it does score some minimal points in investment freedom and property rights. The Communist Party controls and commands almost every aspect of economic activity. Since the early 1990s, North Korea has replaced the doctrine of Marxism’Leninism with the late Kim Il-Sung’s juche (self-reliance) as the official state ideology. Yet the country’s impoverished population is heavily dependent on government subsidies in housing and food rations even though the state-run rationing system has deteriorated significantly in recent years.

North Korea devotes a disproportionately large share of GDP to military spending, further exacerbating the country’s already poor economic situation. Normal foreign trade is minimal, with China and South Korea being the most important trading partners. Trade with India is increasing. No courts are independent of political interference, and private property (particularly land) is strictly regulated by the state. Corruption is rampant but hard to distinguish from regular economic activity in a system in which arbitrary government control is the norm.

The Democratic People’s Republic of Korea is one of the world’s most oppressed and closed societies, and its Communist rulers have repressed basic human rights and nationalized all industry since the country’s founding in 1948. In the 1990s, floods and droughts exacerbated systemic shortcomings and led to severe famine and millions of civilian deaths. North Korea’s economy is mainly supported by international aid and trade with its major trading partners, China and South Korea.

Business Freedom
0.0
The overall freedom to start, operate, and close a business is extremely restricted by North Korea’s national regulatory environment. The state regulates the economy heavily through central planning. Economic reforms implemented in 2002 allegedly brought some changes at the enterprise and industrial levels, but entrepreneurial activity is virtually impossible.

Trade Freedom
0.0
The government controls all imports and exports, and formal trade is minimal. North Korean trade statistics are limited and compiled from trading partners’ data. Most trade is de facto aid, mainly from North Korea’s two main trading partners, China and South Korea. Non-tariff barriers are significant. Inter-Korean trade remains constrained by North Korea’s unwillingness to implement needed reform. Given the minimal level of trade, a score of zero was assigned.

Fiscal Freedom
0.0
No data on income or corporate tax rates are available because no effective tax system is in place. The government plans and manages almost every part of the economy. Given the absence of published official macroeconomic data, such figures as are available with respect to North Korea’s government expenditures are suspect and outdated.

Government Size
0.0
The government owns virtually all property and sets production levels for most products, and state-owned industries account for nearly all GDP. The state directs all significant economic activity. Large military spending further drains scarce resources.

Monetary Freedom
0.0
Price and wage reforms introduced in July 2002 consisted of reducing government subsidies and telling producers to charge prices that more closely reflect costs. Without matching supply-side measures to boost output, the result has been rampant inflation for many staple goods. Because of the ongoing crisis in agriculture, the government has banned sales of grain at markets and returned to rationing. A score of zero was assigned.

Investment Freedom
10.0
North Korea generally does not welcome foreign investment. A small number of projects may be approved by top levels of government; however, the scale of these investments is also small. Numerous countries employ sanctions against North Korea, and ongoing political and security concerns make investment extremely hazardous. Internal laws do not allow for international dispute arbitration. One attempt to open the economy to foreigners was North Korea’s first special economic zone, located at the remote Rajin-Sonbong site in the Northeast. Wage rates in the special zone are unrealistically high because the state controls the labor supply and insists on taking a share of wages. More recent special zones at Mt. Kumgang and Kaesong are more enticing. Aside from these few economic zones where investment is approved on a case-by-case basis, foreign investment is prohibited.

Financial Freedom
0.0
North Korea is a command-and-control economy with virtually no functioning financial sector. Access to financing is very limited and constrained by the country’s failed economy. The central bank also serves as a commercial bank and had more than 200 local branches in 2007. The government provides most funding for industries and takes a percentage from enterprises. Foreign aid agencies have set up microcredit schemes to lend to farmers and small businesses. A rumored overhaul of the financial system to permit firms to borrow from banks instead of receiving state-directed capital has not materialized. Because of debts dating back to the 1970s, most foreign banks will not enter North Korea.

Property Rights
5.0
Property rights are not guaranteed. Almost all property, including nearly all real property, belongs to the state, and the judiciary is not independent. The government even controls all chattel property (domestically produced goods as well as all imports and exports).

Freedom From Corruption
5.0
After the mid-1990s economic collapse and subsequent famines, North Korea developed an immense informal market, especially in agricultural goods. Informal trading with China in currency and goods is active. There are many indicators of corruption in the government and security forces. Military and government officials reportedly divert food aid from international donors and demand bribes before distributing it.

Labor Freedom
0.0
As the main source of employment, the state determines wages. Since the 2002 economic reforms, factory managers have had limited autonomy to set wages and offer incentives, but highly restrictive government regulations hinder any employment and productivity growth.

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Korea Business Consultants Newsletter (1/09)

February 4th, 2009

Korea Business Consultants has published their January newsletter.

Here is a link to the PDF.

Topics covered:
New Year Joint Editorial
Year of DPRK-China friendship
UNDP to resume DPRK operations
Buddhist Leader to Head DPRK’s ROK Affairs
DPRK Railroad Engineers Study in Russia
Housing Construction Progresses Apace
Orascom Opens Bank in Pyongyang
DPRK Tackles Clothing Shortage
“DPRK Harvest Best in Years”
China to Invest in NK Coal
US$ 3.75 Million in Australian Aid for DPRK
The Principles of the DPRK’s Foreign Trade
ROK Farmers Send Rice to DPRK
New SNG Kaesong Plant Idle
“Inter-Korean Trade Slides Due to Weak ROK Won”
ROK to Build Nursery in Kaesong Complex
DPRK Opens Consulate in Dandong
DPRK, China Foreign Officials Meet
Seoul Forum Highlights DPRK Films
“NK Martial Arts Team Best in World”
PUST Opening Delayed
DPRK TV Takes Note of Park Ji-sung
The Korean War

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