State Offices « North Korean Economy Watch

Archive for the ‘State Offices’ Category

DPRK replaces 5,000 won note

Monday, August 18th, 2014

UPDATE 3 (2014-9-2): Simon Cockerell has posted a photo of the new note to his instagram account. You Can see it here.

UPDATE 2 (2014-8-18): According to the Daily NK:

Daily NK has learned that the recent 5000 KPW note exchange has prompted an overall apathetic response from residents in North Korea. As Daily NK first reported here on July 31st the North Korean authorities informed residents that the largest denomination monetary unit would be replaced with a new bill.

US Dollars and Chinese Yuan being the currencies of choice in the markets, the recent collection and exchange of the highest denomination bill “doesn’t really affect people’s lives.”

A source in the capital reported to Daily NK on August 14, “A new [5000 KPW] note has been issued, but the exchange of old to new notes hasn’t made much headway.” This is hardly a nuisance to most residents, who are used to adapting, she went on to explain. “People are fairly indifferent about the new 5000 bill, and anyone who expresses concern about it is considered to be a fool by others.”

Production of the new 5000 KPW notes began last year; at the end of July 2014, the Chosun Central Bank announced that residents would have until 2017 to exchange the old bills. “At first, residents didn’t know what the exchange rate would be when they converted to the new bills, so a bit of chaos ensued; once they found out it was a 1:1 exchange rate, things have been pretty quiet of late,” she explained. “The number of residents holding 5000 KPW notes is pretty low so there isn’t an atmosphere of concern surrounding the matter.” The source did add that it cannot be verified at this time if those in rural or farming areas are equally as impervious to the matter.

The source cited two chief factors underpinning this resident indifference: trust in the authorities continues to decline, as does the value of North Korean currency.

The 5000 KPW bill is the largest denomination of bill in North Korean currency, but when compared with foreign currencies like Chinese Yuan or US Dollars, its value is dismal, considered by most to be “wastepaper.” By current exchange rates, 1 USD is equal to 8000 KPW; in other words, the largest note in North Korea [5000 KPW] is less than 1 USD or equal to approximately 5 RMB.

Moreover, at current market prices, 5,000 KPW [6000 KPW per kilo] is insufficient for people to purchase a kilo of rice or a dozen eggs [5000 KPW yields six eggs at present]. “Even when people buy a block of tofu [700 KPW], they use dollars,” the source explained. “Because merchants only do business in US Dollars of Chinese Yuan, people save all their money in these currencies.”

Citing the 2009 currency reforms, she explained the shift in public sentiment on the KPW, “People won’t suffer any losses even if there are 10 more currency reforms. Even those in poorer, rural areas regard North Korean currency as something for ‘use by the state’ and keep their assets in rice and other goods. ”

This shift in attitude of North Korean currency as “means of exchange” to “means of savings” occurred during and after the Arduous March in the 1990s [the North Korean famine if 1994-1998]. After ceasing distribution of regular food rations, starvation quickly became rife. In order to minimize dependency on a broken state system, people sought to build assets by saving as much KPW as possible.

Tragically, those savings were reduced to worthless scraps of paper during the currency reforms in 2009.The goal of the currency redenomination of November 30, 2009 was officially to bring inflation under control and eliminate monetary overhang, but the result of the 100:1 redenomination was catastrophic. This led to a complete transformation in resident commercial activity. The North Korean residents lost complete faith in state-issued banknotes and adopted foreign currencies, namely Chinese Yuan and US Dollars, as the preferred legal tender for business transactions.

“Because KPW is ‘not even worth counting’, there are more and more people who don’t care about the new 5,000 won bill,” she went on. “Instead of curiosity or trepidation as to the motivations behind the exchange, people just feel reassured by holding onto foreign currency.”

Once the privilege of traders and Party officials working abroad, accessibility to these foreign currencies has trickled down to market vendors and young students. Daily NK has recently learned that markets in all major cities in the North even provide small change back to customers in US Dollars and Chinese Renminbi.

Read the full story here:
Residents Indifferent to 5000 KPW Swap
Daily NK
Seol Song Ah
2014-8-18

UPDATE 1 (2014-8-12): Chris Green has more at NK News here.

ORIGINAL POST (2014-8-11): According to the Choson Ilbo:

North Korea’s new 5,000 banknotes no longer feature a picture of nation founder and demigod Kim Il-sung. But the new note shows Kim’s childhood home in Mangyongdae.

The new bills feature the house prominently on the front and on the back a museum in Pyongyang that displays gifts Kim and his son Jong-il received from foreign leaders*.

During a botched currency reform in 2009, Kim Il-sung was also dropped from the 2,000 and 1,000 won bills.

The 5,000 won note is North Korea’s largest denomination and nominally worth around US$50, though its actual market value is nearer $1. Workers in the North Korean state economy are paid some W3,000 a month on average, making it vital for most to seek other forms of income.

A North Korean source said when the new notes were officially announced on July 25, they sparked fears of yet another misguided currency reform, triggering a certain amount of chaos as food prices surged temporarily and some people began stockpiling food.

* Presumably the Choson Ilbo is referring to the International Friendship Exhibition at Myohyangsan. This is not in Pyongyang (Though it used to be!).

Read the full story here:
N.Korea Drops Kim Il-sung from New Banknotes
Choson Ilbo
2014-8-11

Posted in Central Bank, Fiscal & monetary policy, Price liberalization | Comments Closed

On the availability of Chinese and North Korean rice

Tuesday, July 22nd, 2014

According to the Daily NK:

As volumes of rice bought and sold in North Korea continue to rise, stores operated by foreign-currency earning entities and market vendors are entering into greater competition for customers, inside sources in North Korea report.

“Goods including rice, beans and flour are flowing in steadily from China,” a source from North Pyongan Province explained. “In the olden days the arrival of July would have meant the worst conditions for rice, but this year there have been no big shifts and prices have stayed stable.”

A second source in North Hamkyung Province corroborated the state of affairs, saying, “Every day a number of freight trucks loaded with rice come in through the customs house at Hyesan, and there’s the smuggled stuff, too.”

“It used to be the norm for rice to retail in the jangmadang [market]. Stores only traded it wholesale,” the North Pyongan Province source went on. “But now stores are retailing it, too. Any time rice comes in through customs, buyers are there lining up to take it.”

“Stores” run under the auspices of foreign-currency earning entities began to spring up Pyongyang and other major cities toward the end of 2006. They were given formal permission to sell rice and corn alongside manufactured goods, thus in effect ending the state’s official dominance of domestic grain circulation.

The rice sold in markets comes from two sources: China, and domestic farms. Stores mostly sell rice originating in China, whereas market vendors tend to purvey rice from a variety of sources, sources say. The ratio of Chinese to North Korean rice sold in public markets is roughly 6:4.

Lower socio-economic groups and restaurants catering to the general public tend toward Chinese rice, which is plentiful and cheap but considered insufficiently glutinous. On the other hand, affluent groups are the main purchasers of rice grown in North Korea. The stickiness of the product is higher, but so is the price: roughly 500 KPW more per kilo than Chinese varieties.

“First to attract customers, and then to turn them into regular visitors, both shops and markets are competing on price and service,” one source explained. “The stores sell their rice for 100 or 200 KPW less than the jangmadang, but customers there cannot negotiate, and the seller never throws anything in for free.”

However, this appears to be changing. According to the source, stores have now begun to grant greater price autonomy to shop officials, allowing for haggling over price and other forms of value-added.

“Customers can negotiate prices and get home or business delivery if they purchase more than 100kg,” one source reported. “It’s just like in the market now. Shops have started providing extra services, and delivery men, eager as they are to earn money, have started crowding outside storefronts waiting for customers where once they would have waited on the road.”

Read the full story here:
Price War as Stores Take on Nimble Vendors
Daily NK
Seol Song Ah
2014-7-22

Posted in Agriculture, Black markets, Economic reform, Food, Public Distribiution System (PDS) | Comments Closed

Cabinet meeting on economic policy held

Tuesday, July 22nd, 2014

According to Yonhap:

North Korea recently held a top Cabinet meeting to assess its economic policy in the first half of 2014 and discuss a strategy in the coming quarter, according to a news report.

Premier Pak Pong-ju attended the extended Cabinet plenary session, according to the July 13 edition of the Minju Josun obtained by Yonhap News Agency on Tuesday. It did not specify when it was held.

Cabinet members raised the need to minimize flood damage this summer as a top priority and also stressed the importance of enhancing electricity production, said the North Korean government newspaper.

They also called for a concerted effort to develop the metalworking industry and the chemical sector, which the communist nation views as two pillars of its economic growth drive, it added.

In the first half of 2014, the North exceeded its target in several economic sectors, said the newspaper.

Salt production increased by 39,800 tons from last year’s total and fish catches jumped by 17,000 tons, it said.

Read the full story here:
NK officials discuss economic policy in key Cabinet meeting
Yonhap
2014-7-22

Posted in Cabinet, Economic reform | Comments Closed

Kumgang Resort operational status (UPDATED)

Monday, July 14th, 2014

Pictured above (Google Earth): April 2010 satellite imagery of the Kumgang tourist resort

The Kumgang resort was receiving 400,000 visitors per year until in July 2008 it became the scene of a terrible tragedy, the shooting of a South Korean tourist. Following the incident, the South Korean government prohibited its citizens from visiting the resort until the DPRK allowed a joint-Korean investigation of the shooting and made a guarantee of future safety. The DPRK never agreed to these terms so the park fell idle.

The suspension of the project has cost the DPRK government millions of dollars. In response it has moved to pressure the ROK government to change course and allow the tours to resume. Below I have kept a timeline of the course of these events and their outcomes.

___________

2014-7-14: The Hankyoreh marks July 11–the 6th anniversary of the day when tours to Mt. Keumgang in North Korea were suspended.

“As a result of the suspension of tourism to Mt. Keumgang, we have lost nearly 1 trillion won [US$981 million], including the 300 billion won [US$294.32 million] invested in the facilities and an estimated 530 billion won in lost revenue,” the investors said. They urged the governments of North and South Korea to immediately hold working-level talks to resume tourism to Mt. Keumgang and to hold reunions for divided families.

…

“The position of the government is that the issue of the safety of its citizens must be resolved before it can allow tours to Mt. Keumgang to resume. In addition, given the continuing UN Security Council sanctions in response to North Korea’s nuclear and missile testing, which occurred after tours to Mt. Keumgang were halted, we think that the tours cannot be resumed until the government indicates that doing so would not be in violation of UN sanctions,” said Ministry of Unification spokesperson Kim Ui-do during a regular press briefing on July 11.

2012-11-27: The Hankyoreh reports that North Korea provided a written guarantee for the safety of tourists at Mt. Kumkang during 2010 working level talks with the South Korean government.

2011-9-6: South Korea asks foreigners not to invest in Kumgang saying such investments would violate existing property rights.

2011-9-6: Park Chol-su, head of Daepung International Investment Group, said he wants to discuss with South Korea’s Hyundai Asan how to handle its assets at the North’s Mount Kumgang.

2011-8-31: Chinese tourists arrive in Kumgang on Mangyongbong.

2011-8-30: South Korea calls for international boycott of Kumgangsan resort

2011-8-28: Taephung Investment Group outlines new Kumgang business plan

2011-8-24: Kumgang opened to DPRK and Chinese toursits

2011-8-23: South Korean workers leave Kumgang

2011-8-22: DPRK orders expulsion of remaining South Korean staff, auctioning of assets

2011-8-19: Hyundai officials visit Kumgang amid dispute over fate of company assets

2011-8-6: Steve Parks claims he has signed an MOU with the DPRK government

2011-6-2: “DPRK Law on Special Zone for International Tour of Mt. Kumgang” released. PDF of the statute here.

2011-4-29: SPA designates Kumgang special zone

2011-4-1: DPRK rescinds Hyundai’s Kumgang contract rights

2010-11-15: Kumgang re-fozen

2010-10-31: Family reuniuons were held there in October/November

2010-8-7: DPRK using Kumgagn assets to serve tourists in the North

2010-5-16: Taephung shows Chinese investors Kumgang

2010-5-3: Most South Korean and Chinese employees leave

2010-4-25: The National Defense Commission takes over the properties and puts the Korea Taepung International Investment Group in charge of attracting investors and tourists to the resort.

2010-4-23: Seoul denounces the seizure

2010-4-11: Chinese tourists began arriving at the resort (here and here).

2010-4-11: Employees told to leave/sealed up

2010-4-11:The DPRK “seizes” the Hyundai properties in the Kumgang resort

2010-3-24: Investors worried about losing out

2010-3-18: DPRK threatens to seize Kumgang Resort

2010-3-18: Hyundai-Asan’s chief offers to resign

2010-3-10: DPRK threatens to revoke contracts with South Korean partner, Hyundai-Asan

Posted in Bureau of Special Zone Development, Economic reform, Foreign direct investment, Korea Taepung International Investment Group (Daepung Investment Group), Mt. Kumgang Tourist Special Zone, South Korea, Special Economic Zones (Established before 2013), State Development Bank, Tourism | Comments Closed

DPRK creates Ministry of External Economic Affairs

Wednesday, June 18th, 2014

According to KCNA:

Ministry of Foreign Trade Reorganized as Ministry of External Economic Affairs

Pyongyang, June 18, 2014 20:58 KST (KCNA) — The DPRK decided to reorganize the Ministry of Foreign Trade as the Ministry of External Economic Affairs of the DPRK by merging the Joint Venture and Investment Commission of the DPRK and the State Economic Development Committee of the DPRK with it.

The Presidium of the DPRK Supreme People’s Assembly promulgated a decree in this regard on Wednesday.

Here is what Choson Exchange, who predicted the merger, had to say:

We think this is a good thing. Investor agreements, ‘exclusive’ rights and attraction need to be streamlined to prevent multiple ‘exclusive’ rights being sold. While this can bureaucratize the investment process, things really can’t get more bureaucratic than it is now in North Korea.

Here is analysis by the Institute for Far Eastern Studies (IFES) (2014-6-26):

North Korea Establishes “Ministry of External Economic Affairs” to Oversee Economic Cooperation and Attraction of Foreign Capital

On June 18, 2014, North Korea established the “Ministry of External Economic Affairs,” a massive organization that will oversee the state goals of attracting foreign capital and international economic cooperation. The Korean Central News Agency (KCNA) reported that this change came through a decision made by the Presidium of the Supreme People’s Assembly (SPA), who announced, “The Joint Venture and Investment Commission and the State Economic Development Committee have been combined with the Ministry of Foreign Trade and renamed to the Ministry of External Economic Affairs.”

The KCNA did not report on the new ministry’s specific status or duties, nor reveal the name of who has been chosen to lead it. The three organizations that have been combined to create the Ministry of External Economic Affairs are all Cabinet-affiliated economic groups.

The Ministry of Foreign Trade and the Joint Venture and Investment Commission were previously responsible for the nation’s foreign trade and attracting foreign capital, respectively. The State Economic Development Committee, which had its status elevated from the State Economic Development Board in October 2013, oversees the establishment and management of the various regional economic development zones (EDZ). It appears that although the three agencies targeted for the merge were separated by name according to their respective domains, there are several aspects of their duties which overlap with one another.

Therefore, the creation of this new Cabinet-affiliated ministry can be interpreted as an attempt to reach a breakthrough in North Korea’s stagnating international economic cooperation.

In May 2014, Foreign Trade Minister Ri Ryong Nam visited Syria and discussed plans to invigorate mutual investment and economic cooperation between the two nations not only through trade, but through agriculture and various other methods. On May 12, Ri Song Hyok, the director of the Joint Venture and Investment Commission, announced a development plan for the Wonsan-Kumgang Special Tourist Zone at an investment briefing in Pyongyang aimed at attracting foreigners. The management of Special Economic Zones (SEZ) is the responsibility of the State Economic Development Committee.

In 1998, the Ministry of Foreign Trade was established and encompassed the entirety of North Korea’s international economic activities. However, in July 2010, the Joint Venture and Investment Commission was created and oversaw the attraction of foreign capital, and in October 2013 the State Economic Development Committee was established to develop North Korea’s SEZs. With the creation of these additional organizations in 2010 and 2013, it became inevitable for the work and responsibilities of each agency to overlap one another.

While the Kim Jong Un regime has been focusing its efforts on attracting foreign capital and developing SEZs by strongly supporting the two recently established committees, the Ministry of Foreign Trade was unable to operate properly due to international sanctions. This has led to the recurring observation that, in reality, the ministry has become a titular institution.

The establishment of the Ministry of External Economic Affairs can be seen as a measure taken to increase the efficiency of decision-making and implementation of foreign trade-related issues, and to put an end to the confusion and inefficient inter-competition that arose out of the creation of these additional agencies. From the start of his leadership, Kim Jong Un stressed “constructing a strong economic nation” as a top national goal; attraction of foreign capital and international economic cooperation has become the vital factor to achieve the desired rapid economic development, for the lack of internal resources.

The newly appointed Foreign Minister Ri Su Yong—at the 1st session of the 13th SPA in April 2014—is well-versed in economic affairs. His appointment appears as a strategic move to increase the importance of economic cooperation within North Korea’s diplomatic relations. Ri Su Yong was chairman of the Joint Venture and Investment Commission from 2010 to 2012. With the establishment of the Ministry of External Economic Affairs, which will oversee all of the nation’s foreign economic activities, it is expected that North Korea will steadily push to attract additional foreign capital and develop special economic zones.

Here are previous posts on the Ministry of Foreign Trade, the Joint Venture Investment Commission (JVIC), and the State Economic Development Committee (SEDC).

Posted in Joint Venture Investment Committee (JVIC), Ministry of External Economic Affairs, Ministry of Foreign Trade, State Economic Development Commission (SEDC) | Comments Closed

Market prices stable despite lean period

Friday, May 16th, 2014

According to the Daily NK:

Rice prices in North Korea remain stable despite the arrival of the April-May “spring hardship period,” inside sources have conveyed to Daily NK.

Spring months are usually tough because food supplies run low as North Korea, with its relatively low level of external trade in foodstuffs, waits for the early domestic potato harvest at the end of June. This in turn impacts market rice prices; in May 2012, the price of a kilo of rice skyrocketed by 20% in a single month.

However, this year has been a good one. Sources convey that a kilo of rice is trading in Pyongyang, Sinuiju and Hyesan for 3700, 3850 and 3900 won respectively. This is consistent with preceding months, and below the 4000 won mark initially recorded last December.

The price of corn, often used as a cheap substitute by low-income households when rice gets expensive, is also showing a stable or downward trend. At 800-1000 won per kilo, it is 500 won less than it was in April.

Several factors are contributing to this relative stability, a Hyesan source contended. Firstly, work units on cooperative farms are bringing their stores of rice to market in bulk payment for resources for the planting season. Secondly, May has seen a small decrease in the exchange rate, and this has helped to keep the rice price down in terms of imports.

“It’s the spring planting season and work units have to purchase resources like diesel and fertilizer. People say that ‘rice is money,’ and now they’re selling rice they had stored from last year to purchasing farming products. This means there is enough rice in the markets and the price is stable,” the source said.

A Pyongyang-based source also reported stable market prices, as well as consistent state ration delivery in April.

“The authorities have been continually distributing rations and there is sufficient rice in the markets. More people are buying meat including pork because some laborers had a wage increase. The rice price could drop even further,” he assessed.

Nevertheless, experts in Seoul assert that rice prices could be negatively affected by current dry conditions in the country’s western breadbasket zones

Cho Bong Hyun of the IBK Economic Research Institute clarified to Daily NK, “The recent price stability in North Korea’s markets is because of continuous distribution since the release of military rice reserves last year. Expectations around this year’s output could also impact prices further down the line. Some will plan to store rice if they anticipate this year being a lean one, which will in turn drive up the rice price.”

Read the full story here:
Market Prices Stable Despite Lean Period
Daily NK
Lee Sang Yong
2014-05-16

Posted in 2014 Food Shortage, Agriculture, Food, Public Distribiution System (PDS) | Comments Closed

Who uses Rason’s ports? Lease confusion explored (UPDATED)

Wednesday, May 7th, 2014

UPDATE 2 (2014-5-7): The exact legal status of some of the ports remains a mystery. I have attempted to clarify and point out some of the remaining areas of confusion below.

Pictured above (Google Earth): A 2013-9-14 satellite image of Rason Piers 1 and 2. Pier 1 (Top) is used by the Chinese. The Royale Star is docked at Pier 2.

When Jang Song-thaek was purged, among the laundry list of offenses he was alleged to have committed against the regime was this:

Jang made no scruple of committing such act of treachery in May last as selling off the land of the Rason economic and trade zone to a foreign country for a period of five decades under the pretext of paying those debts.

This phrase had Pyongyang watchers abuzz over whether Chinese contracts in Rason were in any danger of being violated by the North Korean government. Of course it was immediately unclear what enterprise(s) would be affected since we are all unaware of any significant deals reached in May of 2013.

A recent statement by a North Korean official in the Hong Kong media has, however, raised the issue of contract credibility in the DPRK yet again.

According to Yonhap:

Chinese companies have not leased piers at a port of North Korea’s free trade zone, a Pyongyang official has told Hong Kong media, raising speculation that the shock execution of the North Korean leader’s uncle might have soured business ties with its key ally.

China reportedly agreed to invest about US$3 billion in developing the free trade zone in North Korea’s northern tip of Rason, formerly known as Rajin and Sonbong, in late 2011. The special trade zone sits across the border from China’s northeastern Jilin province.

There have been media reports that Chinese companies have leased two piers at the Rason port, but Kim Chun-il, a division chief of the port’s foreign business bureau, denied such reports during an interview with Hong Kong-based Phoenix TV.

Asked by a Phoenix TV journalist whether China won the right to exclusively use two piers at the port, Kim replied in Korean, “There are no piers that are specially used by the Chinese side.”

“They (Chinese people) have said so, but we have never formally rented out Pier 1 and Pier 2 to them,” Kim said.

The interview was made during a 72-minute special TV program on the Rason trade zone, which was aired on April 19. The program’s video footage can be seen on the website of Phoenix TV.

Kim said that Russia leased the Pier 3 at the port, adding that North Korea plans to modernize the two piers on its own.

The Chinese media did indeed claim at least once (see here) that they were “using” Piers 1 and 2. And Dr. Bernhard Seliger told us back in September 2012 that the Chinese were using the port, although no lease was signed [see below].

However, it is not true that the North Koreans have never announced an agreement on Pier 1 at Rason. I posted an article (back in March of this year) in which Choe Hyon Chol, section chief of the new State economic Development Commission, stated the following:

The Rajin Port, a transit trade port, is the hub of international cargo transit transportation and transport of exports and imports of entrepreneurs who invested in the zone.

The port has assignments to transport marine products for export from the East Sea of Korea and every kind of cargoes from and to northeast area of China and Far East Region of Russia.

The Rajin Port consists of three wharves; wharf No. 1 is designed to be renovated and operated by China Dalian Chuang Li Co., Ltd. and wharf No.3 by Rason International Container Transport J. V. Company to be set up according to the contract with Russian Rail Trade Co., Ltd.

I cannot imagine that a Chinese company is going to renovate and operate the pier without a clear contract. Of course the status of that contract is now called into question. Has the Chinese firm pulled out? Have the North Koreans canceled the contract? Are North Korean individuals from different agencies just not on the same page? Who knows?

Still no word on Pier No. 2.

Great recent photos of Rason port by Ray Cunningham here.

You can read the Yonhap story here:
N. Korean official says no piers for China at special trade zone
Yonhap
2014-5-2

UPDATE 1 (2012-9-5): It appears the information in the original post is out-of-date now. So here is an update:

Pictured Above (Google Earth): Rajin Port

Dr. Bernhard Seliger of the Hanns Seidel Foundation writes in with an update on the Rajin Port:

The 80 year old port has three piers, of which the No. 3 pier is used by the Russians. They have a long-term lease (50 years starting in 2008) and while they are currently doing some work there, it is not being used for exports.

China is interested in using Pier No.1 (where it rents a warehouse to store coal) and Pier No. 2 (currently in use by the Koreans). Plans have also been expressed (now cancelled) to build 2 new piers (No. 4 and 5) (See here). For many years the Chinese and North Korean governments have negotiated a pier rental agreement, but for now there is no concrete result–though at numerous times it has been maintained that China already rented the port. What exactly the problems are is not known. For now China uses the port to bring coal from the northernmost Heilongang Province to southern China via a sea route, an event which took place twice this year.

Theoretically, the port as a handling capacity of 3 million sq. tons, however the maximum real handling was 800.000 tons in 1979, while last year it was 200.000 tons. The depth of the harbor is 9 m.

In a report from Xinhua (2012-8-28), the Chinese assert they are using ports 1 and 2.

China […] was using No. 1 and 2 piers, while Russia had leased No. 3 pier, said an official in charge of foreign affairs of the port.

So there is some discrepancy between the Chinese account and Dr. Seliger.

ORIGINAL POST (2010-5-23): What are the three piers at Rason used for?

The City of Rajin (Rason) has three ports (pictured above–click for large version). According to a 1998 UNDP report, Pier No. 1 (on the right) was known as the “Russian-Japanese Bulk Fertilizer Terminal. It has now been leased by the Chinese. Port No. 3 (left) was formerly known as the Rajin Alumina Terminal. This is now leased by the Russians (see here). A fellow North Korea-watcher tells me that Pier No. 2 is reserved for the North Koreans.

KBS recently ran a video on recent changes in Rason. I have uploaded the segment to YouTube (Apologies to readers in China). You can see the video here.

On a side note, if anyone in China has the time and savvy to rip videos from my YouTube account and re-post them on Youku please go for it.

Posted in China, Economic reform, Foreign direct investment, Rason Economic and Trade Zone (Rajin-Sonbong), Sea shipping, State Economic Development Commission (SEDC), Transportation | 2 Comments »

Knowledge sharing SEZ conference held

Friday, May 2nd, 2014

In September 2013 the DPRK held its first conference on economic development zones under the just announced State Economic Development Commission. Read all about it here.

On May 2, 2014, KCNA announced a second conference:

Knowledge Sharing on SEZs in DPRK Held

Pyongyang, May 2 (KCNA) — There took place at Yanggakdo International Hotel on Friday knowledge sharing on SEZs in the DPRK hosted by the Korea Economic Development Association [AKA State Economic Development Commission/Association].

It was attended by Ri Chol Sok, vice-chairman of the association, and its other officials and experts and teachers and researchers at scientific and educational institutions and officials concerned.

Also present there were Kyung-Ae Park, professor at University of British Columbia, Canada, prestigious experts on special economic zones from China, India, Canada, Philippines and the U.S. and foreign diplomatic envoys and representatives of international bodies here and foreign embassy officials.

Ri Chol Sok and Kyung-Ae Park made speeches.

The speakers congratulated those participants on the successful holding of the event and mentioned the importance of the exchange of each other’s experience and cooperation in developing special economic zones and managing and operating them.

They said that the event would help to broaden experts’ vision and expand the development work and also contribute to promoting the international exchange and cooperation.

Then followed speeches.

Introduced at the event were the present situation in some economic development zones of the DPRK and their prospect and policies of preferential treatment and the master plan for Wonsan-Kumgangsan area.

The results of researches and opinions were exchanged and the BOT widely applied to investment and cooperation and the experience gained by various countries in doing so were discussed.

The event marked an occasion in contributing to turning economic development zones of the DPRK into world-level economic cooperation zones by introducing the advanced experience gained in special economic zones according to the specific conditions of the country.

Uriminzokkiri posted this video of Kyung-Ae Park and Yun Yong-sok:

Here is a loose translation of the video:

Q) What were your initial thoughts on the SEZ’s?
A) It is important to differentiate the North’s SEZ’s from those of other countries to make them attractive to investors. For tourism SEZ’s, many experts have recommended minimizing environmental degradation to promote sustainability. 신평 관광개발구 (신평 tourism SEZ) is a good example where sustainable development can help attract tourists who wish to relax and enjoy the environment.

Q) You teach Poli Sci at UBC, how did you get interested in SEZ’s?
A) Faculty exchanges among economics and management experts are often more profitable than academic discussions on political science. Naturally, those who participated in the exchange programs were talking about SEZ’s more often than any other topics.

Q) What are your thoughts on the prospects of the North’s SEZ’s ?
A) I was impressed how the entire country is putting an effort into SEZ projects. This is a very positive aspect, but we need to think about making these SEZ’s more attractive than SEZ’s of other countries.

Here is another translation:

Dr. Park: The key issue of establishing economic development zones (EDZs) is how to make ‘our’ zones distinctive from other countries. In the tourism industry, for example, it has been suggested that simply constructing new buildings, hotels, and condominiums does not offer any competitive advantage because others have been doing the same way. Instead, a better way is to ask ourselves what makes our zones unique so that they could attract people and investment. For North Korea, it is indeed the beauty of the wilderness and untouched nature that makes the country remarkable.

While teaching political science in University of British Columbia, I’ve come to realize that the South-North exchange should first take place in the area where both have mutual interests and the outcome can be mutually beneficial. Exchanges among the political scientists will unlikely be productive; so instead, we have been inviting numerous North Korean professors of economics and business, including those from Kim Il-Sung University, Wonsan University of Economics, and Pyongyang University of Foreign Studies. And this year we are extending our invitation for the fourth time.

Yet, compared to the number of North Korean experts coming to Canada, not many scholars have visited the North from our end as part of an exchange program. While we were considering ways to facilitate an academic exchange at a greater level, we were lucky to get in touch with Korea Economic Development Association (KEDA; aka Chosun Economic Development Committee). We had a meeting on special economic zones last October […] and this was a follow-up meeting after the successful outcome of the first one. Canada-DPRK Knowledge Partnership Program (KPP) organized the event, and KEDA co-hosted the meeting.

Many experts have suggested that more study is needed to make North Korean economic zones distinctive, unique, and attractive. The critical issue remains as to how to attract foreign capital and investment. Despite many challenges North Korea may confront, we believe that passion and diligence of North Koreans will prove fruitful.

Posted in Canada, Economic Development Zones (2013), Education, Special Economic Zones, State Economic Development Commission (SEDC) | Comments Closed

Politburo meeting and 1st session of the 13th SPA

Thursday, April 10th, 2014

UPDATE 3 (2014-4-23): Michael Madden and Ruediger Frank have published articles in 38 north analyzing the “election” results.

UPDATE 2 (2014-4-17): 3th Supreme People’s Assembly Holds First Session, Few Changes in Pak Pong Ju’s Cabinet
Institute for Far Eastern Studies (IFES)

The first session of the 13th Supreme People’s Assembly (SPA) held by the Kim Jong Un regime concluded on April 9, 2014 showing no major personnel changes within the Cabinet. The existing regime will continue to lead the North Korean economy, and their recent economic reform measures are expected to gain momentum.

At this session, it was decided that North Korea will retain Prime Minister Pak Pong Ju as leader of the Cabinet, and that many of the other high-level officials will maintain their positions in economic affairs.

It is therefore expected that the Kim Jong Un regime’s economic reform measures, such as the expansion of farmers’ authority (through the Subworkteam Management System), the construction of economic development zones (EDZs), and the system promoting the independent economic management of factories (and all other production facilities), will be implemented smoothly and stably.

It is also expected that North Korea will ramp up the implementation of its economic management improvement measures due to their recent success, which exceeded the state’s expectations. This directly coincides with the decision to retain Pak Pong Ju as Premier, and is an effort to secure the stability, continuity and longevity of North Korean economic policy.

Only three high-level officials in the economic department were replaced at this first session of the SPA: Han Yong Guk replaced Kim Kwang Yong as the forestry minister, Kim Chon Gyun replaced Paek Ryong Chon as the President of the Central Bank, and Ri Je Son was appointed as the Minister of Atomic Energy Industry.

The Ministry of Atomic Energy Industry is presumed to be an expanded and reformed version of the General Bureau of Atomic Energy (GBAE), which previously operated as an entity under the Cabinet. Established in 2013 at the 7th session of the 12th SPA, the Ministry of Atomic Energy Industry is responsible for North Korea’s nuclear program, nuclear policy, and the “byungjin line”, a policy that emphasizes the parallel development of economy and nuclear weaponry.

In 2013, the Korean Central News Agency (KCNA) announced the establishment of the Ministry of Atomic Energy Industry, saying it will “both modernize and systemize the nation’s atomic energy industry.” In the announcement, the KCNA also said, “because [the Ministry] has been founded on a firm base of cutting-edge technology, both the production and quality of nuclear materials will increase, and development will be made in self-sustaining nuclear powered industries.”

The newly appointed Ri Je Son has served as the General Director of the GBAE since 1997, and was the target of United Nations Security Council sanctions after North Korea’s second nuclear test in 2009.

Han Yong Guk has risen up through the ranks in the forestry sector, and Kim Chon Gyun has previously served as both director and vice-president of the Central Bank of the DPRK.

These small changes in Cabinet personnel do in fact signify efforts to maintain the stability of the nation’s economic policy, but the fact that these changes are so few in number also signifies that, after the execution of Jang Song Thaek, “re-shuffling” of personnel within the Cabinet had already taken place to some degree.

Before his execution, Jang Song Thaek had influences on many ministries within the Cabinet, including the ministries of commerce, metal and coal industries, and the Cabinet’s Extractive Industries. Since his execution, North Korea has replaced the head of these ministries.

UPDATE 1 [1st session of SPA] (2014-4-9): KCNA has posted many articles on the first session of the SPA. I have archived the important ones below:

Story 1: 1st Session of 13th SPA of DPRK Held (KCNA) (PDF). Notes: Kim Jong-un elected as First Chairman of the NDC. State posts determined. One interesting agenda item was not elaborated on: “2. Election of the State Guidance Organ of the DPRK”.

Story 2: DPRK National Defence Commission Elected (KCNA):

Pyongyang, April 9 (KCNA) — The following National Defence Commission was elected at the First Session of the 13th Supreme People’s Assembly of the DPRK:

First chairman of the NDC of the DPRK Kim Jong Un

Vice-chairmen of the NDC Choe Ryong Hae, Ri Yong Mu and O Kuk Ryol

Members of the NDC Jang Jong Nam, Pak To Chun, Kim Won Hong, Choe Pu Il and Jo Chun Ryong.

Yonhap reports on Choe Ryong-hae:

Choe Ryong-hae, a top military official, has become a truly influential figure second to only North Korean leader Kim Jong-un on April 9 when the newly launched North Korean parliament elected him as new vice chairman of the communist country’s most powerful body, National Defense Commission (NDC), during its first session.

…

Choe, the director of the North Korean army’s General Political Bureau, took up the mighty post that had been kept vacant since Jang Song-thaek, a powerful uncle of the North Korean leader, was executed on treason charges in December.

…

With his NDC appointment, Choe has grabbed all of the No. 2 positions of the North’s three core power bodies, the Political Bureau of the Workers’ Party’s Central Committee and the party’s Central Military Commission.

Story 3: Presidium of Supreme People’s Assembly of DPRK Elected (KCNA):

Pyongyang, April 9 (KCNA) — The following Presidium of the Supreme People’s Assembly of the DPRK was elected at the First Session of the 13th Supreme People’s Assembly:

President of the Presidium of the SPA of the DPRK Kim Yong Nam

Its Vice-Presidents Yang Hyong Sop and Kim Yong Dae

Its Honorary Vice-Presidents Kim Yong Ju and Choe Yong Rim

Its Secretary General Hong Son Ok

Its Members Kim Yang Gon, Thae Jong Su, Jon Yong Nam, Hyon Sang Ju, Ri Myong Gil, Kim Jong Sun, Kim Wan Su, Ryu Mi Yong, Kang Myong Chol, Kang Su Rin and Jon Kyong Nam.

Story 4: Members of DPRK Cabinet Appointed (KCNA) (PDF).

Yonhap reports:

Meanwhile, the North apparently opted for stability by making no dramatic changes in a Cabinet shakeup, which the parliament rubber-stamped during its session.

The North’s octogenarian titular head of state, Kim Yong-nam, retained his position as president of the Presidium of the Supreme People’s Assembly, with Premier Pak Pong-ju also keeping his job.

What is notable is that the North replaced its foreign minister. Ri Su-yong, a former ambassador to Switzerland, was named to replace Pak Ui-chun as the top diplomat of the communist country.

Ri is known to have served as a guardian of leader Kim and his younger sister Kim Yo-jong when they studied at an international school in Switzerland in the 1990s.

NK News reports on other changes:

Mun Myong Hak replaced Ri Yong Yong as Minister of Coal Industry
Kim Yong Gwang replaced Han Hyo Yon as Minister of Metallurgical Industry
Ri Hak Chol replaced Kang Min Chol as Minister of Mining Industry
Han Ryong Guk replaced Kim Kwang Yong as Minister of Forestry
Kim Kyong Nam replaced Ri Song Ho as Minister of Commerce
Pak Chun Nam replaced Hong Kwang Sun as Minister of Culture
Kim Chon Gyun replaced Paek Ryong Chon as President of the Central Bank
Pak Myong Chol replaced Kim Pyong Ryul as President of the Supreme Court (not a cabinet position)

Story 5: Director of Supreme Public Prosecutors Office Appointed, President of Supreme Court Elected (KCNA)

Pyongyang, April 9 (KCNA) — The 1st Session of the 13th Supreme People’s Assembly of the DPRK appointed Jang Pyong Gyu as director of the Supreme Public Prosecutors Office and elected Pak Myong Chol as president of the Supreme Court.

Story 6: Panel Committees of SPA of DPRK Elected (KCNA)

The following Legislation Committee and Budget Committee, panel committees of the Supreme People’s Assembly of the DPRK, were elected at the 1st Session of the 13th SPA of the DPRK:

Legislation Committee of the SPA of the DPRK
Chairman Choe Pu Il
Members Jang Pyong Gyu, Pak Myong Chol, Pak Thae Dok, Thae Hyong Chol, Cha Hui Rim and Pak Myong Guk.

Budget Committee of the SPA of the DPRK
Chairman O Su Yong
Members Pak Yong Ho, Kye Yong Sam, Hong So Hon, Kim Hui Suk, Choe Yong Il and Pak Hyong Ryol.

Story 7: Statistics on the SPA members (KCNA)

The elected deputies to the SPA are the genuine people’s representatives who are devoting themselves to strengthening the DPRK government and accomplishing the revolutionary cause of Juche, remaining loyal to the idea and guidance of supreme leader Kim Jong Un.

Among the SPA deputies are anti-Japanese revolutionary fighters who participated in the anti-Japanese armed struggle led by President Kim Il Sung and veterans of the Fatherland Liberation War.

17.2 percent of the deputies are service personnel who are performing shining feats at posts to defend the country and worksites to build a rich and powerful country, true to the Songun revolutionary leadership of Supreme Commander Kim Jong Un.

Workers account for 12. 7 percent, cooperative farmers 11.1 percent and women 16.3 percent. They are bringing about shining labor innovations in the van of the heroic advance to build a thriving socialist nation.

Also among the deputies are officials of the party and power bodies, administrative and economic organs and working people’s organizations, those in the fields of science, education, public health, literature and arts and media and various other sectors and those of the General Association of Korean Residents in Japan and organizations under it.

Winners of Order of Kim Il Sung, Kim Il Sung Prize, Order of Kim Jong Il and Kim Jong Il Prize account for 30.2 percent, recipients of the titles of the DPRK hero and labor hero 14. 6 percent and recipients of academic degrees and titles including professors and doctors and scientists, technicians and experts 91.7 percent.

3.9 percent of the deputies are aged below 39, 66.9 percent 40-59, 29.2 percent above 60 and 94.2 percent of them graduated from universities or received similar level of education.

Story 8: Report on Implementation of State Budget for 2013 and State Budget for 2014 (KCNA)(PDF).

16% of the total expenditure was spent for national defence, thus contributing to smashing the enemies’ reckless moves to ignite a nuclear war and the anti-DPRK confrontation racket and powerfully demonstrating the dignity and might of the DPRK.

45.2% of the total expenditure went to the field of economic construction to consolidate the foundation of the self-supporting economy, bring a surge in the production in various fields of the national economy including agriculture and usher in a heyday in construction.

38.8% of the total expenditure was spent for the field of cultural construction including education, healthcare, sports and music and arts, contributing to the enforcement of popular policies and the building of a highly-civilized socialist nation.

This year’s state budgetary revenue and expenditure have been shaped in such a manner as to meet the financial needs for realizing the Party’s plan to build a thriving nation as early as possible and carrying out the national economy plan.

The state budgetary revenue is expected to grow 4.3% over last year. Out of this, transaction revenue is expected to swell 4.5%, the revenue from the profits of state enterprises 7.9%, that from the profits of cooperative organizations 4.8%, that from real estate rent 9.5%, that from social insurance 5.1%, that from sale of properties and price differential 2.4%, other revenues 1.7% and the revenue from economic and trade zone 5.1%.

This year’s state budget envisages that provinces, cities and counties will ensure the expenditure with their own incomes and deliver revenue to the national budget for their fulfillment of the plan for local budgetary revenue and expenditure.

The state budgetary expenditure is expected to increase 6.5% over last year. Out of this, spending for the fields of agriculture, stockbreeding and fishery is expected to go up 5.1%, that for capital construction 4.3%, that for science and technology 3.6%, that for the vanguard sector of the national economy and the fields of basic industry and light industry 5.2%, that for education 5.6%, that for healthcare 2.2%, that for social insurance and social security 1.4%, that for sports 17.1% and that for culture 1.3%.

15.9% of the total state budgetary expenditure is expected to be spent for national defence this year and a huge amount of educational aid fund and stipends is to be sent to the children of Koreans in Japan.

According to the Wall Street Journal’s Korea Real Time:

The last publicly available figure for Pyongyang’s annual budget, in 2008, was 451.3 billion North Korean won. Based on the latest available market rate, that would be roughly equivalent to $61.8 million. Using that figure to calculate spending on national defense would give a figure of around $8.65 million.

Here are the pictured from Rodong Sinmun:

ADDITIONAL INFORMATION:

1. The Daily NK has an interview with a participant in the 12th SPA.

2. Here is 13th SPA “election” coverage.

ORIGINAL POST [Politburo] (2014-4-9): KCNA reports on the meeting of the Political Bureau of the Worker’s Party:

Meeting of Political Bureau of C.C., WPK Held under Guidance of Kim Jong Un

Pyongyang, April 8 (KCNA) — A meeting of the Political Bureau of the Central Committee of the Workers’ Party of Korea was held under the guidance of Kim Jong Un, first secretary of the Workers’ Party of Korea, first chairman of the National Defence Commission of the DPRK and supreme commander of the Korean People’s Army, on April 8.

It was attended by members of the Presidium of the Political Bureau of the C.C., the WPK, and members and alternate members of the Political Bureau of the C.C., the WPK.

Vice-premiers of the Cabinet and some department directors, first vice-department directors and vice-department directors of the C.C., the WPK were present at the meeting as observers.

The meeting discussed the issue of reinforcing the organization for increasing the leadership role and function of the Party as required by the developing revolution.

It discussed a proposal for forming the state leadership body to be submitted to the First Session of the 13th Supreme People’s Assembly.

It also discussed an organizational matter.

Decisions on the relevant agenda items were unanimously adopted at the meeting.

Kim Jong Un at the meeting set forth important tasks to be fulfilled to further strengthen the WPK to be an invincible revolutionary party, firmly protect the dignity and sovereignty of the country and dynamically accelerate the work to improve the standard of the people’s living and the building of a rich and powerful country.

The meeting held under the guidance of Kim Jong Un marks a historic occasion that encouraged the service personnel and people in the struggle to dynamically advance along the road of independence, Songun and socialism under the uplifted banner of great Kimilsungism-Kimjongilism and provided an important milestone in bringing earlier the building of a thriving nation and a great revolutionary event of national reunification.

Here are photos from Rodong Sinmun:

Here is coverage in the Daily NK.

Read the full story here:
Meeting of Political Bureau of C.C., WPK Held under Guidance of Kim Jong Un
KCNA
2014-4-8

Posted in Cabinet, Finance, Fiscal & monetary policy, Political Bureau, State Offices, Supreme Peoples Assembly, Worker's Party | Comments Closed

DPRK replaced Minister of Commerce

Monday, April 7th, 2014

According to Yonhap:

North Korea has replaced its commerce minister last month, according to state-run media report Saturday, amid efforts to phase out supporters of Jang Song-thaek, the executed uncle of the current leader.

North Korea’s radio broadcaster Pyongyang Broadcasting Station reported that new Commerce Minister Kim Kyong-nam was in attendance at a food festival marking the birth anniversary of the country’s founder.

It was the first time that Kim Kyong-nam was introduced as commerce minister by North Korean media, but it appears likely the replacement took last month during the nationwide election.

Kim’s predecessor Ri Song-ho, who took office in 2012, failed to be re-elected to the Supreme People’s Assembly in the parliamentary election on March 9.

The food event was held from Wednesday through Friday in commemoration of the April 15 birth anniversary of Kim Il-sung, the current leader’s grandfather.

Experts say the replacement of the minister post is likely a follow-up measure to last December’s execution of Jang, the once powerful uncle of Kim Jong-un.

The March election was seen by some as a way for young leader Kim Jong-un to fill up the Assembly with people close to him and consolidate his power in the reclusive country.

As of this posting, the new minister has not been announced on KCNA.

Read the full story here:
N. Korea ousts commerce minister
Yonhap
2014-4-5

Posted in Ministry of Commerce | Comments Closed

North Korean Economy Watch

Archive for the ‘State Offices’ Category

DPRK replaces 5,000 won note

On the availability of Chinese and North Korean rice

Cabinet meeting on economic policy held

Kumgang Resort operational status (UPDATED)

DPRK creates Ministry of External Economic Affairs

Market prices stable despite lean period

Who uses Rason’s ports? Lease confusion explored (UPDATED)

Knowledge sharing SEZ conference held

Politburo meeting and 1st session of the 13th SPA

DPRK replaced Minister of Commerce

Pages

Archives

Categories