DPRK ministerial shakeup and SPA elections announced

January 5th, 2009

UPDATE 3: According to numerous media sources, Choe Sung Chol has been shot (h/t Marmot). Read more here: Bloomberg, Reuters, Korea Times.

UPDATE 2: According to the Joong Ang Daily:

North Korea’s point man on South Korea, who was earlier said to have been sacked for misjudgment, is said to be undergoing what sources called “severe” communist training at a chicken farm, sources here said yesterday.

Choe Sung-chol, once a vice chairman of the Asia-Pacific Peace Committee, the North’s state organization handling inter-Korean affairs, was reported to have been dismissed in early 2008 for what sources called his lack of foresight on South Korea’s new conservative administration under President Lee Myung-bak.

Political dissidents in North Korea are said to often undergo training on the communist revolution. This includes hard labor in harsh environments, such as mines or in labor camps.

Choe, 52, became better known to South Korean officials and the public in 2007, when he escorted then-President Roh Moo-hyun throughout his visit to Pyongyang for a summit with North Korean leader Kim Jong-il.

He is also known to have played a key role in arranging the summit.

Officials in Seoul have acknowledged the dismissal of Choe, but could not confirm his whereabouts or why he was sacked.

“He has been undergoing training for about a year now, so it really is hard to tell whether he will be reinstated or not,” another source said, also speaking on condition of anonymity.

(UPDATE 1) Shortly after the DPRK’s ministerial and leadership changes were dscovered, the DPRK announced the Supreme People’s Assembly will be recomposed in March.  According to Reuters:

The reclusive North’s official media said in a two-sentence dispatch the election for deputies to its Supreme People’s Assembly would be held on March 8, without offering details.

North Korea wants to promote economic elite to the assembly to help lay the groundwork for the next generation of its leadership, a think tank affiliated with the South’s intelligence service said in a report in December, Yonhap news agency said.

However, analysts cautioned against reading too much into the leadership changes, saying Kim Jong-il and his inner circle hold the real power while ministers and other government officials have almost no influence in forming policy.

The assembly session that typically meets in April each year is a highly choreographed affair focused on budget matters where legislation is traditionally passed with unanimous approval.

North Koreans can vote only for the candidates selected by supreme leaders who allocate assembly seats to promote rank-and-file officials and purge those no longer in favor.

“Even if we know that someone was replaced, everything related to it is pure speculation because we have no clue as to the individual inclinations of these people,” said Andrei Lankov, an expert on the North at the South’s Kookmin University. (Reuters)

The Joong Ang Ilbo provides some additional facts:

The election is also a mere formality in the North because the candidates are hand-picked by the Workers’ Party and then approved by North leader Kim Jong-il.

The five-year terms of the 687 representatives, selected in 2003, were supposed to end last September. North Korea watchers have speculated that Kim’s health was linked to the election delay. According to intelligence sources in Seoul, Kim suffered a stroke in August.

North Korea watchers said Kim’s appearance at a polling station will put an end to speculation about his health. Kim had cast ballots in the 1998 and 2003 elections, according to past North Korean media reports.

With the upcoming election, Kim’s regime will enter its third term. The newly formed legislature will, on paper, form a cabinet, devise a national budget plan and conduct foreign policy.

Following former leader Kim Il Sung’s death in 1994, the Supreme People’s Assembly did not meet for four years. At that meeting, it elected the younger Kim as the National Defense Commission chairman and officially launched his regime. At the time, the legislature also amended the Constitution and undertook a dramatic cabinet shakeup.

ORIGINAL POST
According to the Joong Ang Daily:

Yu Yong-sun, a 68-year-old Buddhist leader, has become North Korea’s senior South Korea policy maker, a top Seoul official told the JoongAng Ilbo yesterday.

Choe Sung-chol, deputy director of the United Front Department of the North Korean Workers’ Party, was in charge of Pyongyang’s South Korean affairs until early last year. After he lost the job, Yu, head of the Korean Buddhists Federation, was appointed to the post, the source said.

“Yu succeeded Choe in March last year,” the source said. “Choe was once deeply trusted by [North Korean] leader Kim Jong-il, but he stepped down because he had failed to accurately assess the outcome of the 2007 presidential election in the South, the Lee Myung-bak administration’s North Korea policy and the outlook for inter-Korean relations.”

The source also said corruption scandals involving the overseas North Korean assistance committee under the United Front Department played a role in Choe’s sacking.

Choe played a crucial role in arranging the second inter-Korean summit between the president of South Korea at the time, Roh Moo-hyun, and Kim in 2007.

Yu, the successor, is not an entirely new face in inter-Korean affairs. Since 2000, he represented the North in several rounds of inter-Korean ministerial talks. He has led the Buddhist group since May 2006.

“We’ve also obtained intelligence that Kwon Ho-ung, who used to be the chief negotiator for the inter-Korean ministerial talks, stepped down from the post and has been put under house arrest,” the source said.

The North reshuffled its cabinet recently, according to the South’s Unification Ministry. Ho Thaek, vice minister of the electric power industry, was promoted to minister. Other minister-level promotions also took place at the Ministry of Railways, Ministry of Forestry and Ministry of Foreign Trade. (Jeong Yong-soo, JoongAng Ilbo)

The Choson Ilbo reports on some more ministerial changes:

North Korea has reshuffled two cabinet ministers and appointed a new man to a key post in the Workers’ Party. North Korean state media reported that Kim Tae-bong was appointed new metal industry minister and Hur Tack new power industry minister. They replace Kim Sung-hyun and Pak Nam-chil. Kim Kyong-ok as newly-named first deputy director of the ruling party’s Organization Guidance Department that controls the party, Army and administration and is headed by leader Kim Jong-il.

It is rare for reshuffles to be announced separately. The new economic appointments may be related to the emphasis on “economic recovery” in a New Year’s statement released in the state media last week that is the closest the North has to an annual message from Kim Jong-il, a government official here speculated. The statement described the metal industry as the “pillar of the independent economy of socialism” and said the electricity, coal and railroad sectors “should take the lead in the people’s economic development through reforms.” Hence replacement of the metal and power industry ministers, according to the official. He admitted little is known about the newly appointed ministers.

The Organization and Guidance Department’s new first deputy director Kim Kyong-ok is reportedly in charge of regional party organizations.

“If the power succession is to move smoothly, the economy must be revived and control of the party organization is essential,” an intelligence officer here said. He predicted noticeable changes in the North’s power structure this year. A researcher at the Korea Institute of National Unification said North Korea “is going to take various steps in a bid to prevent Kim Jong-il’s authority from weakening due to ill health.”

And from Yonhap:

North Korea promoted industrial veterans to top posts in its latest Cabinet reshuffle, signaling Pyongyang’s stepped-up drive to rebuild the country’s frail economy, Seoul officials and analysts said Tuesday.

A reshuffle in the communist state is usually inferred when new faces appear in its media, as the country does not publicize such moves.

Five new names were mentioned as the North’s ministers of railways, forestry, electricity, agriculture and metal industry in the North’s New Year message and reports in October, Seoul’s Unification Ministry Spokesman Kim Ho-nyoun said.

“They are formerly vice ministers or those who climbed the ladder in each field. The reshuffle considered their on-spot experiences and expertise,” the spokesman said.

It was not clear when the reshuffle took place, he said.

North Korean media have been reporting a brisk campaign to rebuild the country’s ailing industrial infrastructure, following up on the New Year economic blueprint rolled out by leader Kim Jong-il. Kim called on citizens “to solve problems by our own efforts” and increase production in electricity, coal and daily equipment.

In the reshuffle, Jon Kil-su was named minister of railways; Kim Kwang-yong minister of forestry; Ho Taek minister of power industry; Kim Chang-sik minister of agriculture; Kim Tae-bong minister of metal industry.

Kim Kwang-yong and Kim Chang-sik were vice ministers and Jon held a senior post in their respective ministry. Ho was formerly a power plant chief, while little was known about Kim Tae-bong, Seoul officials said.

The shakeup was rumored to have affected more posts, but the Seoul spokesman could not officially confirm it.

Koh Yu-hwan, a North Korea studies professor at Seoul’s Dongguk University, said the reshuffle is a sign that the North is shifting its focus to the economy from the military. In its New Year message, Pyongyang pledged to build a “prosperous and powerful nation” by 2012, the 100th anniversary of North Korean founder Kim Il-sung’s birth, he noted.

“The key word this year is the economy,” Koh said. “The reshuffle seems to suggest officials with technical expertise should take the initiative to develop the economy.”

Kim Young-yoon, a researcher with the Korea Institute for National Unification, said Pyongyang is turning to its natural resources amid suspension of South Korean aid. The Seoul government halted its customary aid of rice and fertilizer this past year as Pyongyang refused offers of dialogue.

“North Korea has no other way but turn to its own natural resources as long as inter-Korean relations and the nuclear issue are in limbo,” he said.

Read the full articles here:
Buddhist leader gets North’s South policy spot
JoongAng Daily
Jeong Yong-soo
1/5/2009

N.Korea Reshuffles Economic Posts
Choson Ilbo
1/5/2009

N. Korea promotes industry veterans in Cabinet reshuffle
Yonhap
Kim Hyun
1/6/2008

North Korea says to elect MPs in government shake-up
Reuters
1/6/2009

North to hold parliamentary election
Joong Ang Ilbo
Ser Myo-ja
1/8/2009

Top North official said to be getting re-educated
Joong Ang Daily
1/12/2009

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Posted in Buddhist Alliance, Cabinet, Environmental protection, Forestry, Inter-Korean summit, Lumber, Manufacturing, Ministry of Electrical Industry, Ministry of Foreign Trade, Ministry of Forestry, Ministry of Metal Industry, Ministry of Power and Coal, Ministry of Railways, Organization and Guidance Department, Political economy, Railways, Supreme Peoples Assembly, United Front Department | 6 Comments »

2009 Joint Editorial published

January 5th, 2009

North Korea’s “New Year’s Day Joint Editorial” lays out the government’s policy priorities for the year—similar to a US State of the Union address. In the editorial, which is quite long, the government committed to strengthening the military, ridding the peninsula of nuclear weapons, improving the economy (energy, agriculture, and transport) and improving the people’s quality of life.  Although the editorial is quite long, KCNA published a summary (KCNA link here, PDF here).

Today the Korean Worker’s Party threw itself a rally in Kim il Sung Square in support of the 2009 Joint Editorial. 

Here are some reactions in the press:
Jon Herskovitz in Reuters, Korea Times, AFP, Xinhua.

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Posted in Domestic publication, Kim's New Year Address (Joint editorials), Political economy | 1 Comment »

2008 Top Items in the Jangmadang

January 1st, 2009

Daily NK
Park In Ho
1/1/2009

The marketplace has become an extremely important ground in North Korean people’s lives. 70 percent of North Korean households in the city live off trade, handicrafts and transportation businesses related to trade. If the jangmadang works well, people’s living situation is good, otherwise it is not. In the situation where the food distribution system has broken down, the whole economic existence of the populace is bound up in jangmadang trade.

Trade is bound to generate successful merchants but also failures, due to a lack of know-how or confiscation of products by the People’s Safety Agency (PSA), or simply because a competition system operates. These failures in the jangmadang do not have any second opportunity to rise again so they frequently choose extreme acts like defection, criminality or suicide. Failure is serious.

However, the revitalization of markets has caused great changes in North Korean people’s values. The individual-centered mentality among the people is expanding and the belief that money is the best tool is also spreading. Due to such effects, the North Korean communist authorities in 2008 made the regulation to prohibit women younger than 40 years old from doing business, but of course the people use all necessary means to maintain their survival.

Daily NK investigated the 2008 top ten items in the jangmadang, so as to observe developments in North Korean society.

1. Rice in artificial meat, the first instance of domestic handicraft

Since 2000, the most ubiquitous street food has been “rice in artificial meat,” which is made from fried tofu with seasoned rice filling. This food is found everywhere on North Korean streets. One can find women who sell this snack in alleys, at bus stops and around stations. It costs 100 to 150 North Korean Won.

Meanwhile, the most popular street food is fried long-twisted bread. Individuals make the fried bread at home and sell it on the street. The length of the fried bread is around 20 centimeters and it sells for 100 won.

In around 2005 corn noodles were popular on the streets, but now street-stands for noodles have largely disappeared due to the existence of a permanent store controlled by the state.

These days, if one can afford to eat corn noodles, at approximately 1,000 won for a meal, one can safely say that one is living comfortably.

2. Car battery lights North Korea

The reason why North Korean people like car batteries is that the authorities provide a reliable electricity supply during the daytime, when consumption is less than at night, but at night they don not offer it. The authorities shut down the circuit from around 8 PM to 9PM, and from 12 AM to 2 AM: when the people watch television the most.

As a result, the people charge their car batteries during daytime and use it at night. A 12V battery can run a television and 30-watt light bulb. If they utilize a converter, they can use a color television, which needs more electricity.

Ownership of batteries is a standard of wealth. Officials use electricity from batteries in each room. They usually draw thick curtains in their rooms, to prevent light shining through that might draw attention to their status.

3. The strong wind of South Korean brand’ rice-cooker, Cuckoo

A South Korean brand pressure rice-cooker called Cuckoo appeared as a new icon for evaluating financial power among North Korean elites.

It has spread from the three Chinese northeast provinces into North Korea. In North Korea, Chinese rice and third country aid rice, dry compared to Korean sticky rice, generally circulates, but if the lucky few use this rice-cooker, they can taste sticky rice the way Korean people like it.

There are Cuckoo rice-cookers from South Korean factories that arrive through Korean-Chinese merchants, and surely other Cuckoo products from Chinese factories. These two kinds of rice-cookers, despite having the same brand name, sell for different prices.

The Chinese-made Cuckoo sells for 400,000-700,000 North Korean Won (approximately USD114-200), while the South Korean variety costs 800,000-1,200,000 (approximately USD229-343). A Cuckoo rice-cooker tallies with the price of a house in rural areas of North Korea. According to inside sources, they are selling like wildfire.

4. An electric shaver only for trips

The electric shaver is another symbol of wealth.

It is not that they use electric shavers normally, because one cannot provide durability. At home, North Korean men generally use disposable shavers with two blades made in China or a conventional razor. However, when they take a business trip or have to take part in remote activities, they bring the electric shaver.

There are North Korean-made shavers but most are imported from China. Among Chinese products, you can see “Motorola” products and fake-South Korean products with fake labels in Korean. A Chinese-made electric shaver is around 20,000-40,000 North Korean Won.

5. Chosun men’s fancy shoes

Dress shoes are one of the most important items for Chosun men when they have to participate in diverse political events, loyalty vows or greeting events at Kim Il Sung statues on holidays. Right after the famine in the late 1990s, it was considered a symbol of the wealth, but now general workers, farmers and students are wearing dress shoes.

The shiny enameled leather shoes with a hard heel cannot be produced in North Korea because of a lack of leather. The North Korean authorities provide the National Security Agency (NSA) and officers of the People’s Army with dress shoes, which are durable but too hard and uncomfortable.

Shoes for general citizens and students are mostly made in China and some are produced in joint enterprises in Rajin-Sunbong. The price of shoes ranges from 30,000 to 100,000 Won depending upon the quality.

6. Cosmetics prosper despite the economic crisis

Cosmetics and accessories for women are getting more varied. Lately, false eyelashes have appeared in the jangmadang in major cities. Chinese cosmetics are mainly sold, alongside fake South Korean brands. In Pyongyang, Nampo, Wonsan and Shinuiju Chinese and even European cosmetics are on sale.

“Spring Fragrance,” a North Korean luxury cosmetics brand, is famous for being Kim Jong Il’s gift that he presents to women soldiers or artists when he visits military units or cultural performances. It costs more than 200,000 North Korean won.

Lotions for women, made in China, are approximately 2,000-4,000 won, foundation cream is 3,000-5,000 won, and lipstick is from 500 won to 2,000 won. Hand cream is 3,000-5,000 won.

7. Hana Electronics recorder, the biggest state-monopoly production

“Hana Electronics” was originally set up to produce CDs and DVDs of North Korean gymnastic performances or other artistic performances, so as to export them foreign countries. The company has been producing DVD players since 2005.

Due to the state monopoly, the DVD player of the Hana Electronics dominates the market. North Korean people call a VCR and a DVD player a “recorder.” Since around 2005, after the booming interest in South Korean movies and dramas, the players have been selling very well.

At the beginning, North Korean visitors to China brought the DVD or CD players into North Korea, but as they got popular among the people, Chinese-made players were imported from China and since 2006 they have been really popular in every jangmadang.

Accordingly, since 2006, the authorities have started blocking the importation of the Chinese player and are selling the Hana Electronics players, which sell for around a 20 or 30 percent higher price than Chinese players in state-run stores. Now, they can be sold in the jangmadang by private merchants and comparatively free from inspection by the PSA. The prices are 130,000-150,000 won.

8. Bicycles are basic, the motorcycle era is here now

In major cities, numbers of motorcycles are increasing. Especially in border regions where smuggling with China is easier than in other cities, motorcycles are common.

The motorcycles are ordinarily used for mid or long distance business. Most motorcycles are made in China and some are Japanese second-handed products, which sell for 1.5-2.5 million won. 125cc new products are over 5 million won. The cheapest second-handed motorcycle is 500,000 won.

9. Vinyl floor covering for the middle class and vinyl for the poor

Demand for vinyl floor coverings and vinyl has been increasing since the late 1990s, when residential conditions improved. In the late-1990s people had to use sacks of cement or Rodong Shinmun (newspaper) as a floor covering, but now they are using vinyl floor coverings.

Uses for vinyl are unimaginably diverse: from a basic protection against wind and cold to when people take a shower at home in the vinyl tunnel hung on the ceiling of the bathroom.

Depending on the thickness and width, there are four or five kinds of vinyl in the jangmadang for from 150 to 500 won. Vinyl floor covering is a Chinese product selling for from 3,000 to 10,000 won.

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Posted in Agriculture, Black markets, Clothing, Cosmetics, Economic reform, Electricity, Energy, Food, General markets (FMR: Farmers Market), Manufacturing, Ministry of People’s Security (Criminal Police), Ministry of State Security (MPSS, NSA, SSD), Price liberalization, Television | Comments Closed

DPRK Law on Foreign Investment

January 1st, 2009

From Naenara: 

Adopted by the resolution of the Standing Committee of the Supreme People’s Assembly (SPA) on Oct. 5, 1992, and revised and supplemented by the decree of the SPA Presidium on Aug. 19, 2008

_________________________________

Article 1. Mission and status

This Law contributes to encouraging investment by foreign investors in the DPRK and protecting legal rights and interests of foreign-invested businesses.

The Law is the basic law relevant to foreign investment.

Article 2. Definition of terms

1. A foreign investor is a corporate body or an individual of a foreign country that invests in the territory of the DPRK.

2. Foreign-invested businesses include foreign-invested enterprises and foreign enterprises.

3. A foreign-invested enterprise stands for an equity or contractual joint venture or a wholly foreign-owned enterprise that are set up in the territory of the DPRK.

4. A foreign enterprise indicates an institution, enterprise, individual or other economic organizations from foreign countries with a source of income in the territory of the DPRK.

5. A contractual joint venture is a form of business activity in which investors from the DPRK and a foreign country jointly invest, the management is assumed by the partner from the host country and, depending on the provisions of the contract, the portion of the investment made by the foreign investor is redeemed or the share of the profits to which the foreign investor is entitled is distributed to him.

6. An equity joint venture is a form of business activity in which investors from the DPRK and from a foreign country invest jointly, operate the business jointly, and profits are distributed to the investors in accordance with the shares of their investment.

7. A wholly foreign-owned enterprise is a business enterprise in which a foreign investor invests and manages on his own account.

Article 3. Location

A foreign investor shall be permitted to set up and operate an equity or contractual joint venture within the territory of the DPRK, and a wholly foreign-owned enterprise in the specified area.

Article 4. Protection of rights and interests, provision of their management conditions

The State shall guarantee the legal rights and interests of foreign investors and foreign-invested businesses, as well as the conditions of their management activities.

Article 5. Parties to investment

Institutions, enterprises, individuals and other economic bodies of foreign countries shall be permitted to invest within the territory of the DPRK.

Overseas Korean compatriots shall also be allowed to invest within the territory of the DPRK, subject to the relevant laws and regulations.

Article 6. Sectors and forms of investment

A foreign investor shall be allowed to invest in various sectors such as industry, agriculture, construction, transport, telecommunications, science and technology, tourism, commerce and financial services in various forms.

Article 7. Priority sectors

The State particularly encourages investment in sectors that introduce modern technologies including the high technology, sectors that produce internationally competitive goods, the sectors of resource development and infrastructure construction, and the sectors of scientific research and technical development.

Article 8. Preferential treatment

Those foreign-invested enterprises that invest and operate in priority sectors stipulated in the previous Article shall receive preferential treatment, including the reduction of and exemption from income and other taxes, favourable conditions for land use, and the preferential supply of bank loans.

Article 9. Preferential treatment in the Rason economic and trade zone

Those foreign-invested enterprises that are established in the Rason economic and trade zone shall receive preferential treatments as follows:

1. No customs duty shall be levied on export and import goods other than those items that are prescribed by the State.

2. For an enterprise in a production sector, no income tax shall be payable for 3 years from the first profitable year and income tax may be reduced by up to 50 per cent for the following 2 years. The rate of income tax shall be 14 per cent, which is lower than in other areas.

Article 10. Immigrations in the Rason economic and trade zone

The State shall ensure that the relevant institutions make convenient the immigration formalities and methods for foreign investors entering or leaving the country with the purpose of setting up or operating business enterprises in the Rason economic and trade zone.

Article 11. Prohibition and restrictions on investment

The projects where investment shall be prohibited or restricted are as follows:

1. Projects which endanger the national security or injure public morals of the nation

2. Projects geared to resource export

3. Projects that are inconsistent to the specific standards for environmental protection

4. Technically obsolete projects

5. Projects with low profit

Article 12. Investment property, property rights

A foreign investor may invest in the form of currency, property in kind, industrial property rights, technical know-how and other assets and property rights. The value of assets and property rights invested shall be determined through an agreement between the partners on the basis of the international market prices prevailing at the time of the valuation.

Article 13. Establishment of a branch office, representative office and agency

Foreign-invested enterprises shall be permitted to open branch offices, agencies or liaison offices and to establish subsidiaries in the DPRK or other countries. They shall also be permitted to conduct joint operations with companies in other countries.

Article 14. Legal capacity

Equity or contractual joint venture enterprises and wholly foreign-owned enterprises shall become corporate bodies of the DPRK. Foreign enterprises and their branches, agencies and liaison offices that are set up within the territory of the DPRK shall not become corporate bodies of the DPRK.

Article 15. Term of land lease

The State shall lease the land required for foreign investors and the establishment of foreign-invested enterprises for a maximum period of 50 years.

Land so leased may be transferred or inherited during the period of lease with an approval of the relevant organ.

Article 16. Employment and dismissal of labour

A foreign-invested business shall employ its labour force from the host country. Managerial personnel, technicians and skilled workers for special jobs that are prescribed in the contract may be employed from abroad in agreement with the central trade guidance organ.

Labour force of the DPRK shall be employed or dismissed according to a contract made with the relevant labour service agency.

Article 17. Taxation

Foreign investors and relevant foreign-invested businesses shall pay income tax, turnover tax, property tax and other taxes.

Article 18. Reinvestment

Foreign investors shall be permitted to reinvest the whole or part of their profit within the territory of the DPRK.

In such cases the whole or part of the income tax already paid on the reinvested portion may be refunded.

Article 19. Protection of invested property

Foreign-invested enterprises and assets invested by foreign investors shall not be subject to nationalization or seizure by the State.

Should unavoidable circumstances make it necessary to nationalize or seize such enterprises and assets, fair compensation shall be paid.

Article 20. Remittance

Legal profit and other incomes earned by a foreign investor in its business may be remitted abroad, subject to the laws and regulations of the DPRK relating to foreign exchange control.

Article 21. Confidentiality

The State shall protect by law the business secrets of foreign-invested enterprises and shall not disclose them without the consent of the foreign investor.

Article 22. Settlement of disputes

Any disagreement concerning foreign investment shall be settled through consultation.

In case of failure in consultation, it shall be settled by arbitration or legal procedures provided by the DPRK or may be brought to an arbitration agency in a third country for settlement.

Preferential Treatment for Investment in Priority Sectors
From Naenara:

Article 8 of the Law of the Democratic People’s Republic of Korea on Foreign Investment specifies that the foreign-invested enterprises that invest and operate in priority sectors shall receive preferential treatment, including the reduction of and exemption from income and other taxes, favourable conditions for land use, and preferential supply of bank loans.

In accordance with the law, the DPRK government grants such preferential treatment as the reduction of and exemption from taxes and favourable conditions for land use to foreign-invested enterprises that invest in priority sectors, enterprises that are established and operated with the investment by overseas Koreans with the citizenship of the DPRK and foreign-invested enterprises that are operated in the special economic zone.

Preferential treatment in the rate of enterprise income tax is as follows.

1) Preferential treatment

– The rate of enterprise income tax of a foreign-invested business is 25 per cent of the taxable income but that of a business funded by an overseas Korean holding the citizenship of the DPRK is 20 per cent. (No. 1 of Article 20 of the Regulations for the Implementation of the Law of the Foreign-invested Business and Foreign Individual Tax)

– The rate of enterprise income tax of a foreign-invested business operating in the Rason economic and trade zone is 14 per cent of the taxable income but that of a business funded by an overseas Korean with the citizenship of the DPRK is 10 per cent. (No. 2 of Article 20 of the Regulations for the Implementation of the Law of the Foreign-invested Business and Foreign Individual Tax)

– The rate of enterprise income tax of a foreign-invested business engaged in the State-encouraged sectors—high technology, development of underground resources, infrastructure construction, scientific research and technological development is 10 per cent of the taxable income. This rate is 10 per cent lower than that of other income taxes of a foreign-invested business. (No. 3 of Article 20 of the Regulations for the Implementation of the Law of the Foreign-invested Business and Foreign Individual Tax)

– When a foreign enterprise earns other incomes such as income from dividends, interests, rent, royalties or other sources in the territory of the DPRK, such incomes shall be taxable at the rate of 20 per cent in other parts of the country and 10 per cent in the Rason economic and trade zone. (Article 10 of the DPRK Law on Foreign-invested Business and Foreign Individual Tax)

2) Privilege

Article 29 of the Regulations for the Implementation of the Law of the Foreign-invested Business and Foreign Individual Tax stipulates that:

-Tax may not be imposed on the dividends earned by a foreign-invested enterprise through business activities inside the DPRK.

– In case the government of a foreign country or an international financial organization grants loans to the government of the DPRK or a State bank, or in case a foreign-invested bank gives loans to a bank or an enterprise of the DPRK on favourable terms such as low interest rates (lower than the LIBOR) and the return period of at least 10 years including a grace period, the enterprise income tax on the interest on the loan may be exempted.

-The foreign-invested business which operates for at least 10 years either in the priority sectors or in the manufacturing sectors inside the Rason economic and trade zone may receive immunity from enterprise income tax for 3 years from the first profit-making year and reduction of up to 50 per cent during the two ensuing years.

Enterprise income tax may be exempted or reduced on an income earned by a financial business through offshore banking transactions.

-For a foreign-invested business that makes a total investment of at least 4 500 000 000 won in infrastructure construction projects such as railways, roads, telecommunications, airports and seaports inside the Rason economic and trade zone, enterprise income tax may be exempted for 4 years from the first profit-making year and reduced up to 50 per cent during the three ensuing years.

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Posted in DPRK Policies, Economic reform, Foreign direct investment, Law on Foreign Investment | Comments Closed

Chinese expand reach over DPRK’s coal

December 31st, 2008

Via China Knowledge:

Henan Yima Coal Mining Group, one of the leading state-owned coal miners in Henan Province, said the company planned to invest in a 10-million-ton coal mine and a 1.2-million-ton coal chemical project in North Korea, the China Daily reported.

The Chinese coal miner and the Anju Coal Mining Association, the country’s largest coal miner with nearly ten coal mines, signed an agreement on Dec. 12 to develop the two projects.

Under the agreement, the two projects, with Yima Group holding controlling stakes, will be built by stages. Auxiliary facilities, such as power plant and coal-selecting plant, are also expected to be jointly constructed by the two companies.  North Korea is rich in coal resource [sic], a main energy source of the country’s self-dependent economy.

Source:
Chinese coal miner taps into North Korea
China Knowledge
12/31/2008

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Posted in Anju Coal Mining Association, China, Coal, Economic reform, Energy, Foreign direct investment, Joint Ventures, Mining/Minerals | Comments Closed

Pueblo crew awarded $65 million by US court

December 30th, 2008

From the Associated Press (via the New York Times):

A federal judge has awarded more than $65 million to several men of the Navy spy ship Pueblo, who were captured and tortured by North Korea in 1968.

The judge, Henry H. Kennedy Jr. of Federal District Court, issued the judgment against North Korea on Tuesday.

North Korea did not respond to the lawsuit, which accused it of kidnapping, imprisonment and torture. Four former crewmen of the Pueblo filed the suit in 2006.

Citation:
Judgment Is Issued in North Korea Suit
Associated Press
12/30/2008

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Posted in Lawsuits, USA | Comments Closed

Status of US food aid deliveries to North Korea

December 30th, 2008

(UPDATE BELOW)
Press Statement by Sean McCormack
December 30, 2008
US Department of State web site

Question:  Will you please provide an update on the deliveries of food aid to North Korea?

Answer:   To date, over 143,000 metric tons of U.S. food (wheat, corn, and soybeans) has been delivered to North Korea. Of that amount, the latest shipment of 25,000 metric tons of corn and soybeans arrived in North Korea on November 23 and has completed unloading for distribution by the U.S. NGOs. The latest shipment of food aid (totaling 21,000 metric tons), which was expected to arrive by the end of December, is now expected to arrive in the DPRK on January 2, due to recent rough seas.

The United States has not stopped food aid to North Korea. Under the terms of our agreement with the DPRK, there is to be no limit imposed on the Korean language capabilities of the World Food Program (WFP) and U.S. NGO staff implementing the food aid program. The lack of sufficient Korean speakers on the WFP program is one of the key issues in ongoing discussions. The issuance of visas for Korean-speaking monitors for the WFP program is another issue currently being discussed, along with other technical issues. A delegation that recently visited North Korea, identified problems in the implementation of the world food program portion of the food aid program. Those problems are not yet resolved.

Under the most recent agreement reached at the six party talks, the US has committed to sending 500,000 tons of food assistance to North Korea within the 12 months beginning in June 2008.  So far the US has shipped 143,000 tons. 

South Korean civil society is also contributing:

Two South Korean charities say they’ve shipped food and fuel to impoverished North Korean families suffering in the cold.

A shipment of food for babies and their mothers worth about $302,300 is to be distributed in Hoeryong by the Seoul-based Jungto Society, a Buddhist group, Yonhap News Agency reported Tuesday.

Families in Hoeryong are particularly vulnerable because the town sits on the remote northeastern tip of North Korea and and receives less assistance from other regions, said Kim Ae-Kyung, a Jungto spokesman.

The shipment includes dried seaweed powder, flour, milk powder, sugar and salt for 2,500 mothers and 6,300 infants and children.

Another South Korean charity, Briquet Sharing Movement, said it has delivered 50,000 charcoal fuel briquets to North Korean border towns Kaesong and Kosong.

In all, the two towns have received 800,000 briquets from the charity this year, enough to help heat 3,200 homes, Yonhap reported.

(UPDATE) From the Korea Times:

[T]he “Easter Star” was en route to the reclusive country with 21,000 metric tons of corn and will soon arrive at the port of Nampo.

American NGOs, such as Mercy Corps, World Vision and Global Resource Service will distribute the aid in Jagang and North Pyeongan Provinces, the official added. The State Department originally expected the aid to reach the port by the end of this month.

It will be the sixth shipment of the 500,000 metric tons of promised food aid. In May, the U.S. agreed to resume the aid in June for 12 months. The United States given 143,000 metric tons of food assistance so far, State Department spokesman Sean McCormack told reporters in Washington last week.

The NGO official also said 4,940 metric tons of a corn-soya blend and corn oil will be separately shipped to North Korea in mid-January as the seventh shipment, and NGOs will distribute them in the same regions.

NGOs have been a regular channel for Washington to distribute its promised assistance. The World Food Program under the United Nations has also distributed food assistance on the U.S. government’s behalf.

The shipment will be the first aid package reaching North Korea after talks on dismantling the North Korean nuclear program came to an abrupt end without substantial agreement in early December.

In spite of the stalemate on the nuclear issue, McCormack said, “Our humanitarian program will continue.” U.S. attention is now shifting to stationing Korean-speaking staff working with the WFP and NGO programs at the point of distribution.

Read the full articles here:
Charities send food, fuel to North Korea
UPI News
12/30/2008

US Corn Aid to Arrive in North Korea Jan. 3
Korea Times
Kim Se-jeong
12/28/2008

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Posted in Agriculture statistics, Briquet Sharing Movement, Food, Foreign aid statistics, International Aid, Jungto Society, Statistics, UN, UN World Food Program, USA | Comments Closed

Korea Buiness Consultants Dec ’08 newsletter

December 30th, 2008

Korea Business Consultants published their December 2008 newsletter.  You can read it on line here, or download the PDF here.

The following topics are covered:
Orascom Launches DPRK Mobile Phone Service
Pyongyang Undergoing Facelift
Obama’s DPRK Options
US Brothers Light Up DPRK Hospitals
Kuwait to Lend DPRK US$21.7 Million
DPRK Finds More Natural Resources
DPRK Engineers to Study Russian Rail Operations
Swedes to Make Jeans in DPRK
KNIC Wins Insurance Case
DPRK, ROK Agree on Tokdo
DPRK to Strengthen China Ties
Russia’s House Speaker to visit DPRK
DPRK, Singapore Sign Investment Agreement
DPRK Praises Yemen’s Reunification Example
ROK Wave on the Wane in DPRK
DPRK Girls World Soccer Champions
New DPRK Destinations
Korean Cuisine

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Posted in Economic reform, Foreign direct investment, Joint Ventures, Korea Business Consultants | Comments Closed

Hockey Night in North Korea

December 29th, 2008

The Globe and Mail, Toronto (via Cancor)
Nathan Vanderklippe
12/29/2008

Maybe it was the traditional hotpot meal with dog meat, maybe it was the pre-game beer or maybe it was the unsettling gaze of the Great Leader and the Dear Leader, their portraits glaring down from high above the Pyongyang Ice Rink. Whatever it was, Hockey Night in the (Former) Axis of Evil, a game that may well qualify as the most peculiar of the year, did not begin well.

On one side was a team of 18-year-old North Koreans shod in 20-year-old leather skates. On the other, a team jam-packed with the world’s hockey superpowers: nine expatriate Canadians plus two Finns and a Swede, playing in what they believe was the first-ever international amateur hockey game inside the world’s most reclusive country.

And the Canucks and Co. not only started slowly but ended up falling 11-9 — the damage to Canada’s international hockey reputation still unknown.

In fact, within minutes of the opening face-off, the fast-passing North Koreans had already bagged four unanswered goals. Goalie Scott Lau, a lawyer from Toronto (team nickname: “DPRK Five-Hole”), blamed the arena lighting. “It was kind of dark,” he said. The arena eventually cranked up the brightness. It helped, but only a little.

“I think he let in five of his first six shots near the net,” said team captain Ray Plummer. “They were going wide, he managed to block them and put them in the net.” That, of course, was before the North Korean team relented in the interest of being good hosts.

Three inauspicious periods later — complete with smoke breaks at intermissions to watch the DPRK’s sole Zamboni at work on the DPRK’s sole rink — and the Good Guys strode off the ice in defeat.

Not that anyone really cared. For these expatriates, who live in Asia and work as students, teachers, venture capitalists, hoteliers and diplomats, the October game fulfilled a dream to “go where no team has gone before.”

“How many people go to the DPRK — not many! And how many play hockey there as amateur hacks — just us!” said Mr. Plummer, an Atlantic Canadian who, in his younger and speedier days, turned down a contract in the OHL to attend university instead. “My father said stick with hockey and you’ll go far,” he said. Little did he know.

Mr. Plummer, a construction project manager, met his wife at centre ice in Beijing, where teams of expats square off during winter months in beer-league play. Similar leagues have sprouted up wherever puckheads and hosers have landed, and the Beijing players have for decades competed in annual tournaments in Shanghai, Bangkok, Hong Kong and Taipei.

Over the years, they also began playing in Ulan Bator against Mongolians who compete on outdoor ice in minus 35 temperatures. Hockey has become a channel for philanthropy, and the ex-pats have donated equipment, lessons and international travel to Mongolian kids who otherwise couldn’t afford to play.

But several years ago, Mr. Plummer began searching for a new adventure. What better, he figured, than playing in North Korea? Few people are allowed into the hermit nation; fewer still come to play hockey. Pyongyang has hosted several International Ice Hockey Federation games, but the country has only a few dozen hockey players and they don’t play in globetrotting beer leagues.

“We thought, ‘Here’s a crazy place to go. Let’s play hockey, but go as tourists and experience something barely anybody experiences,'” Mr. Plummer said. He contacted a travel agent with experience getting foreign visitors into North Korea to ask if it might be possible. This summer, for reasons unknown, they were invited to come. A few months later, after shelling out $2,000 each for the trip, they found themselves on a Russian-made Tupolev jet bound for a country where the roads are empty, the cities go dark at night and portraits of Kim Il Sung and Kim Jong Il abound.

“It was truly like going to another planet,” Mr. Plummer said. They hit the tourist sites, were lectured about the evil ways of the “Imperialist Americans” and travelled to the demilitarized zone dividing North and South Korea, where they discovered the Maple Leaf proudly displayed as part of North Korea’s own Axis of Evil.

And they suited up for a second game against the young North Koreans, who play on the country’s development team, and will likely one day compete at the national level. The ice was Olympic-sized, the referee an official with the IIHF. But for all that, they lost again, this time 6-4.

“They played Soviet-type spread-out, passing, skating, circle the puck,” Mr. Plummer said. “They’re not great, and there’s not a big pool of players to pick from. But they’re better than old, ex-pat foreigners who are just up there for some tourism and hockey.”

After the game, after taking photos with the young players whose language they couldn’t speak, the expats offered their sticks as a token of friendship. The North Koreans offered a retired set of national team jerseys in return. Mr. Plummer plans to send one of them to the Hockey Hall of Fame in Toronto.

Olivier Rochefort, one of the team’s leading goal-scorers and the director of operations for the Beijing Radisson SAS hotel, can scarcely believe it. Not only has he traded slap shots with North Koreans — he now has a shot at something even greater.

“We need to autograph that jersey,” he said, laughing. “That’s the only way my name’s going to be in the Hockey Hall of Fame.”

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Posted in Civil society, Sports | Comments Closed

Distribution of Soy Sauce Resumed

December 29th, 2008

Daily NK
Lee Sung Jin
12/29/2008

A source has relayed news that North Korea has begun to so-called “essential food factories” in provincial capitals for the first time since Kim Il Sung’s death, and that distribution of soy sauce and soybean paste to civilians in those cities has resumed.

A source from Yangkang Province said in a phone conversation with the Daily NK on the 28th, “Essential food factories situated in each province entered production in October and every household has been provided with a kilogram of soybean paste and a kilogram of soy sauce on a monthly basis ever since. Such provision is on a par with the amount rationed when the Supreme Leader (Kim Il Sung) was alive in the 1990s.”

A North Hamkyung Province source said, “At a North Hamkyung Province essential food factory in Chongjin, production began in October and a kilogram of soybean paste and soy sauce has been being provided to each household once a month.”

North Korea changed the name of “food factories” in each city and province to “essential food factories” in 1993, and remodeled the buildings. It also pursued the modernization of equipment for soy sauce and soybean production. However, due to the “economic crisis” following Kim Il Sung’s death in 1994, the operation of all food factories ceased.

Accordingly, the resumption of operations has triggered the analysis that the “confidence” of the North Korean authorities has been restored regarding both North Korea’s agricultural production and the food situation this year.

A source from Yangkang Province emphasized, “Soybean and peas which have been coming in as foreign aid have sometimes been used to produce the soybean and soy sauce to be provided to Pyongyang, the military and the construction units, but this is the first time that rations to average civilians have resumed since the Kim Il Sung’s death. The reason for the state’s display of concern for the civilian economy is because farming went well this year.”

He then said, “Not only in Yangkang Province, but essential food factories in Hamheung and Pyongsung have also been brought back online. The civilians are hoping that soybean paste and soy sauce distribution will be normalized.”

The source noted, “In the Hyesan Essential Food Factory, approximately 22 tons of ingredients for soybean paste and soy sauce, including peas and wheat, are used daily. At such a rate, a kilogram of soybean paste and soy sauce can be provided to civilians each month over a fixed term.”

He then went on to explain the backdrop, “The storage capacity of the soybean paste fermentation tank in the Hyesan Essential Food Factory is about 60 tons, but with the 22 tons of ingredients that have been coming in each day, only a portion of the production equipment has been operating.

According to North Korea’s central pricing system, a kilogram of soybean paste and soy sauce are 150 North Korean Won and 80 won, respectively. The source added, however, “The soybean paste produced from the factories has been extensively sold in the jangmadang for 300 won per kilogram. Homemade hot pepper paste has been being sold for 900 won per kilogram.”

Therefore, North Korean authorities are said to have held civilian education lectures nationwide, on or around the 19th, stressing the subject, “Regarding strictly adhering to the national grain regulations and preserving army rations as the top priority.”

The source added, “Within less than a month of the resumption of the essential food factories, some managers and cadres of the factories were found to have embezzled the soybean paste ingredients, so the state authorities held formal reeducation lectures for officials. Also, the civilians in the counties or farmlands have not been receiving soy sauce and soybean paste, because only the essential food factories have been operating.”

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Posted in Food, General markets (FMR: Farmers Market), Price liberalization, Public Distribiution System (PDS) | Comments Closed

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