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The reports of my death are greatly exaggerated..

Sunday, February 17th, 2008

Update:
It seems opposition efforts to spare the South Korean Ministry of Unification were not entirely successful. Yonhap is reporting that even though the ministry will retain its name, much of the rest of it is on the chopping block.

Sources said that if the ministry is retained, its five divisions and one office may be reduced to a single office and three bureaus, with part of its work transferred to the other ministries.

The ministry’s five division headquarters — including unification policy, economic cooperation and cultural exchange — are likely to be reorganized into smaller bureaus, with public relations and information analysis to come under the direct control of the minister.

The office in charge of the Kaesong industrial complex may be turned over to the newly created Ministry of Knowledge-based Economy.

However, the ministry may retain control of inter-Korean dialogue headquarters, the inter-Korean transit office, and a settlement support team for people who have fled North Korea. (Yonhap)

Although I personally favor an engagement policy with the DPRK, sending the signal that MoU standard practices will no longer be tolerated might actually encourage the DPRK to use donated funds and supplies in an acceptible way. Remember: carrots AND sticks. See the game theory here. However, since the DPRK’s new game seems to play the US, China, Russia, and South Korea off of each other, some are concerned that pushing the DPRK too hard on accoutability and transparency in managing their donations might simply shift North Korea more firmly into China’s corner–which according to Lankov, they already have a strong incentive to do…

Original Post: 2/8/2008
In the political shake up following the recent South Korean elections, incoming President Lee Myung-bak floated the idea of merging the Ministry of Unification (responsible for the North Korea protfolio) with the South Korean Foreign Ministry. The story is here.

Today, Reuters is reporting that the Unification Ministry is here to stay. Afterall, the first rule of bureaucracy is, “Why have one ministry when you can have two at twice the cost!”

South Korean lawmakers have agreed to spare the ministry responsible for relations with North Korea and reject a call for its closure made by the president-elect, local media reported on Saturday.

The compromise allows the Unification Ministry to stay while lawmakers try to strike a deal to shut other ministries in a plan backed by Lee to streamline government, local media reported lawmakers as saying.

Critics say Lee’s proposal to close the ministry primarily responsible for relations with North Korea could send the wrong signal to Pyongyang, which has long accused Lee’s conservative party of plotting to keep the peninsula divided.

The Unification Ministry has been at the centre of criticism that the outgoing government had been too soft on the impoverished North, pouring aid across the border despite internationally condemned missile and nuclear tests. (Reuters)

The full article can be found here:
South Korea to keep ministry on North: media
Reuters
Rhee So-eui
2/8/2008

New gov’t to downsize Unification Ministry
Yonhap
2/17/2008

Posted in Economic reform, Foreign direct investment, Inter-Korean summit, Joint Ventures, Kaesong Industrial Complex (KIC), Mt. Kumgang Tourist Special Zone, Political economy, RoK Ministry of Unification, Special Economic Zones (Established before 2013) | 1 Comment »

David Kang on North Korean trade potential

Tuesday, February 12th, 2008

Kang: North Korean Trade Potential
Council on Foreign Relations
12/17/2007

Last December, David C. Kang, a professor of government at Dartmouth College and an adjunct professor at Tuck Business School, discussed the North Korean economy for the Council on Foreign Relations. I have excerpted some of his comments below.

His view on the new North-South cargo train service:

It doesn’t have huge economic significance in the overall GDP of North Korea. But it does have major economic significance in the fact that what North Korea had to do in order to let a train go through was an awful lot of adjustment[…]in terms of linking up the railroad, all the ministries had to prepare. The old [Korean Energy Development Organization] had this problem as well. [W]hen they wanted Americans and South Koreans working in North Korea to build this light-water reactor, [they] had to set up protocols [Post offices, phone calls, where they were going to stay, etc]. It is pretty significant in terms of how much they had to adjust.

He quoted the following figures on North – South trade:

From $200 million in 1998, to now exceeding $1.7 billion in 2007. South Korea’s total trade volume is $250 billion.

His opinion on the direction of the North Korean economy:

At this point what we’re seeing is very initial steps on the part of North Korea as they try to open up reform and yet maintain control. At the same time, they are being forced into a number of institutional changes and mind-set changes that are the first step forward in this process.

His view of North Korea’s comparative advantage:

Most of the companies that have gone in—the South Korean companies that have gone in—are assembly and light manufactures, such as or textiles and light consumer goods. This is the sort of obvious point of departure. It’s not hugely capital intensive in terms of building factories, and can take advantage of North Korean cheap labor and South Korean technological advantages.

There are a lot of potential mineral resources in North Korea, which would require a whole infrastructure of legal reforms to happen before anyone would take care of them. But at this point the safest bets are the ones that are on the order of assembly and light manufactures in the North and then exporting them out.

His view of South Korea’s long term goals:

If there’s unification, or even better relations, and South Korean companies can use cheap North Korean labor, instead of having to send those factories to China or Vietnam—not only do they speak Korean, they’re culturally similar, and the labor would be cheaper.

[I]f you could reconnect the railroads, from Japan, through Pusan [South Korea], up through North Korea, then out to China and Russia, you would be linking up all these economies in a much more efficient way than they are now. So everybody wants that. But obviously there’s the political problem. And even on the infrastructure side, the North Korean rail system is so old and so decrepit, that basically it would have to be rebuilt from zero. But the potential upsides are massive, in the long run.

His view of China’s engagement:

China has been essentially as deeply involved in economic engagement with North Korea as has South Korea—and by some measures, actually more so. Whereas South Koreans just do this assembling, some Chinese companies are moving in and building full factories in the North. There’s a lot of interest in Chinese-North Korean economic relations on both sides.

Posted in China, Economic reform, Foreign direct investment, International trade, Kaesong Industrial Complex (KIC), Manufacturing, Mining/Minerals, Mt. Kumgang Tourist Special Zone, Political economy, Price liberalization, Railways, Rason Economic and Trade Zone (Rajin-Sonbong), Sea shipping, South Korea, Special Economic Zones (Established before 2013), Statistics, Trade Statistics, Transportation | Comments Closed

Tourism boost to North in works – and this is good

Wednesday, February 6th, 2008

Yesterday the Jong Ang Daily reported that Hyundai Asan hopes to draw more tourists to the DPRK this fall, but their forecasting record is not exactly stellar:

The number of tourists to Mount Kumgang tallied 350,000 last year. The North Korean tour unit of Hyundai Asan hopes to pull the number of visitors up to 430,000 this year, 10,000 of whom would head to Kaesong, which began tours in December, and 15,000 of whom would visit Mount Paektu, with tours slated to start in May.

Hyundai Asan had marked annual losses from 1999 until it made profits in 2005. Its 2007 profits totaled 10 billion won.

Today, Andrei Lankov, writing in the Asia Times, chimes in on his experiences with the new Kaesong Tour and gives a rationale for western participation in such activities:

The Kaesong tour is the first project which gives the average South Korean, Mr Kim or Ms Pak, an opportunity to see a semblance of North Korean life. Hitherto, only a handful of South Koreans, most of them government officials, have been able to visit North Korean cities. Now, for the first time in 60-odd years, a very limited opportunity is open for an anybody who is willing to pay a fee.

Of course, North Korean authorities went to extraordinary lengths to prevent any interaction between locals and visitors. The list of prohibited items is quite impressive. Tourists cannot take any kind of printed material, computers and computer equipment, mobile phones, radios and video cameras, universal serial bus and other memory devices. The old film cameras are banned as well. Only digital cameras are allowed into the North, since at the border check point North Korean police officials check every single picture taken by every single tourist.

Despit the limitations, Lankov still feels that these types of exchanges are ultimately worthwhile…

The extraordinary security measures undertaken by the North Korean authorities ensure that only a very limited number of northerners are allowed to approach the visitors. Nonetheless, the tours are a major event.

Every single day, a small city is invaded by an impressive motorcade: 10 large imposing buses, half a dozen jeeps and other vehicles – incidentally, produced in South Korea. The preparations are thorough and, one might suspect, seriously disrupt the city’s routine. The North Koreans can see, albeit from the distance, the visitors – their dress, their height, their behavior. The South Koreans can immediately see how poor the North is. It seems that North Koreans, being necessarily street-smart, also instantly feel the South Korean prosperity.

The waitresses, girls in small stalls and even a handful of genuine guides (not the plaincloth intelligence operatives) who can see the visitors will also notice a lot. Even the willingness of the guests to spend a dollar on a cup of instant coffee or a few cookies is an important sign to them – after all, the average monthly salary in Kaesong is about $4. Those South Korean guests definitely do not look like impoverished victims of evil US imperialism. For a while it will be possible to explain away their extravagant behavior by insisting that those people come from the exploitive elite. But the longer the tours continue, the more difficult the task will become.

So why did the North decide to open Kaesong in the first place? It seems that the major reason is the easy currency income the project brings to Pyongyang. Every visitor pays 180,000 won ($190) – a hefty sum for a one-day bus trip. Out of this amount, 100,000 won goes to the North Korean authorities. All investment into necessary infrastructure is done by Hyundai Asan, so for the North this is easy money. Since 17,000 visitors joined the tours during the first two months of its operations, annual earnings could be in excess of $10 million.

At the same time, they might believe that the Kaesong area has become ideologically contaminated anyway. The Kaesong industrial park is located just a few kilometers from the city. In this facility, some 15,000 North Korean workers are employed in factories owned and run by South Korean capital, largely small businesses which are in desperate need of “cheap labor”.

These workers interact with South Koreans regularly, and they also see life inside the industrial park, which presents a remarkable contrast with their native towns or villages: well-paved roads, trees planted everywhere, modern buildings and round-the-clock supply of water and electricity. Even traffic lights, famously absent from North Korea, are present in this de-facto South Korean enclave.

So why did the North decide to open Kaesong in the first place? It seems that the major reason is the easy currency income the project brings to Pyongyang. Every visitor pays 180,000 won ($190) – a hefty sum for a one-day bus trip. Out of this amount, 100,000 won goes to the North Korean authorities. All investment into necessary infrastructure is done by Hyundai Asan, so for the North this is easy money. Since 17,000 visitors joined the tours during the first two months of its operations, annual earnings could be in excess of $10 million.

The only way to promote change, evolutionary or revolutionary, is to bring North Koreans into contact with the outside world. The North Korean dictator and his elite might see partial exchanges as an easy way to earn money, which is necessary for them to maintain their caviar and cognac lifestyle. In the short term they are probably right. But in the long term, the exchanges will make breaches in the once monolith wall of information blockade. Sooner or later, those breaches will become decisive.

The full articles can be found here:
Tourism boost to North in works
Joong ang Daily
Moon So-young
2/6/2008

A breach in North Korea’s iron curtain
Asia Times
Andrei Lankov
2/7/2008

Posted in Economic reform, Foreign direct investment, Kaesong Industrial Complex (KIC), Mt. Kumgang Tourist Special Zone, Rason Economic and Trade Zone (Rajin-Sonbong), South Korea, Special Economic Zones (Established before 2013), Tourism | 1 Comment »

Hyundai Asan to Post $10 Mil. in Operating Profit

Friday, December 28th, 2007

Korea Times
Ryu Jin
12/28/3007

Hyundai Asan, the South Korean operator of various cross-border economic projects with North Korea such as Mt. Geumgang tourism program, said Friday that its operating profit this year is estimated to exceed 10 billion won (roughly $10.6 million).

“We saw a great upturn for our profits this year thanks to an increase in the number of tourists to Mt. Geumgang,’’ a ranking company official said. “According to our tentative calculation, the operating profit is expected to surpass 10 billion won.’’

Hyundai Asan, which began another tour program to North Korea’s border city of Gaeseong this year, expects that the company’s annual sales will reach 300 billion won this year, a notable increase from 220 billion won last year.

According to the firm, some 350,000 people crossed the border to the North to visit the mountain resort on the eastern part of the peninsula, up from last year’s 240,000, largely thanks to the launch of a new route up the inner part of the mountain in June.

Company officials anticipate that the tours will further prosper next year, as it plans to start a fresh tour program to Mt. Baekdu on the border between China and North Korea next May.

Founded in February 1992, Hyundai Asan has suffered losses for a long time. But its large-scale investment in the poverty-stricken Stalinist state is paying off at last. In 2005, the company went into the black with 5.7 billion won in operating profit for the first time.

Posted in Foreign direct investment, Kaesong Industrial Complex (KIC), Mt. Kumgang Tourist Special Zone, South Korea, Special Economic Zones (Established before 2013), Tourism | Comments Closed

S. Korea’s president-elect vows cooperation for N. Korea, closer ties with U.S.

Wednesday, December 19th, 2007

Yonhap
Byun Duk-kun
12/19/2007

Lee Myung-bak, almost certain to be South Korea’s next president, will likely continue engaging North Korea through economic cooperation, but the extent should rely deeply on Pyongyang’s commitment to full denuclearization, unlike his predecessor who has often been under fire for granting unconditional aid to the North, analysts said Wednesday.

Closer ties with Washington will also be prioritized by the incoming administration of conservative Lee, who has criticized President Roh Moo-hyun for alienating the U.S. in dealing with the nuclear-armed communist North.

The entrepreneur-turned-politician says he can and will increase the communist nation’s per capita income to US$3,000 in 10 years, if Pyongyang completely abandons its nuclear ambitions.

“There will be no immediate changes to the country’s North Korea policy if the North continues to move down the path of denuclearization,” Kim Woo-sang, a political science professor at Seoul’s Yonsei University and a key advisor to the president-elect for security and foreign policy, said in an earlier interview with Yonhap News Agency.

Under a six-nation deal, North Korea has to disable its key nuclear facilities and disclose all its nuclear programs by the end of the year in return for economic and energy assistance and political benefits.

North Korea began disabling the Yongbyon complex early last month, but has yet to make a full declaration of its nuclear programs amid a five-year dispute between Pyongyang and Washington over the existence of a secret nuclear weapons program in the North.

The nuclear crisis erupted in late 2002 when the U.S. accused the North of running a uranium enrichment program. North Korea denies having any uranium program.

Seoul has regularly provided hundreds of thousands of tons of food and other humanitarian aid to the North since the historic inter-Korean summit between then President Kim Dae-jung and North Korean leader Kim Jong-il in 2000.

The Lee administration will continue to provide such assistance strictly based on humanitarian views, but economic cooperation between the divided Koreas will suffer significant reduction should the communist nation choose not to give up its nuclear weapons, Kim noted.

Further development or continuation of “ongoing economic cooperation projects, such as the Kaesong industrial complex, will be left to the market,” Kim said.

“The government will no longer try to encourage South Korean businesses to move into the industrial complex by providing subsidies and other benefits as it currently does, but will try to foster a better environment so the businesses and foreign investors will invest voluntarily,” he added.

At an October summit in Pyongyang, President Roh Moo-hyun and the North Korean leader agreed to launch various other reconciliatory projects, but Lee has said some of those projects will be subject to reconsideration.

Another visible change in policy towards North Korea will come in the way Seoul deals with the nuclear issue, the Yonsei professor said.

“Mr. Lee puts more weight on the six-nation denuclearization process than anything else, so the new administration will never try to take its own initiative or try to pressure China to convince North Korea to denuclearize,” he said.

While seeking more international cooperation in denuclearizing the North, Lee is expected to move closer to the United States, an ally Lee says has served as a capstone for Seoul’s security and economic development since the end of 1950-53 Korean War.

“The governments of Kim Dae-jung and Roh Moo-hyun neglected Korea’s relationship with the United States. China and Japan are important partners, but the next government will be moving in a different direction, focusing on Korea’s traditional relationship with Washington,” Lee had said in September.

The 65-year-old Lee has also noted his administration may try to push back the timing of taking back the wartime operational control of South Korean troops from the United States, which is currently scheduled to occur in 2012.

“As Mr. Lee has repeatedly said, there will be no renegotiation of the transfer of wartime operational control, but the scheduled timing of the transfer could become very sensitive depending on security conditions surrounding the Korean Peninsula in 2012,” said Kim.

Posted in Economic reform, Foreign direct investment, International Aid, Kaesong Industrial Complex (KIC), Mt. Kumgang Tourist Special Zone, Political economy, South Korea, Special Economic Zones (Established before 2013) | Comments Closed

Wireless Comms, Internet in Kaesong Industrial Complex and Kumgang Mountain Tourist Resort

Monday, December 17th, 2007

Institute for Far Eastern Studies (IFES)
NK Brief No. 07-12-17-1
12/17/2007

North and South Korea are poised to allow Internet, telephone, and cellular services to be available in the Kaesong Industrial Complex (KIC) and at the Kumgang Mountain Tourist Resort beginning next year. The 7th Defense Ministerial Talks opened on December 12 at the ‘Peace House’ on the South Korean side of Panmunjum, and at the meeting, North and South Korea reached an agreement regarding communications, transportation, and customs.

According to the agreement, Pyongyang has given permission for the use of Internet landlines and cellular phones in the two largest inter-Korean cooperative projects. However, while the South Koreans pushed for the inclusion of “mobile phones” in the agreement, the North insisted on “wireless telephone communications”, suggesting that they hope to use dual-use wired telephones rather than mobile cellular phones.

In addition, under the agreement, North and South Korean rail and road traffic will be allowed to cross the border daily from 7:00am to 10pm, with the exception of Sundays and official holidays. Currently traffic in the area is limited to 7am~6pm in the summer, and 8am~5pm in the winter months.

The two sides also agreed to new procedures aimed at simplifying customs inspections and reducing delivery delays. From now on, the two sides will exchange lists of goods being moved, after which time any specific good that is flagged will be inspected. Currently, both sides are required to supply a list of goods to be pass through the area three days in advance, and every piece is individually inspected, complicating customs procedures.

The agreement was signed ROK Defense Minister Kim Jang-soo and Kim Il-chul, minister of the DPRK People’s Armed Forces, and went into effect on December 13. With this agreement, exchange and cooperation in the KIC and Kumgang Mountain resort are expected to even more actively grow.

Posted in Automobiles, Cell phones, Communications, Economic reform, Email, Foreign direct investment, Internet, Intranet, Kaesong Industrial Complex (KIC), Mt. Kumgang Tourist Special Zone, Railways, Special Economic Zones (Established before 2013), Telephones, Transportation | Comments Closed

North Korea Google Earth (Version 7)

Friday, December 14th, 2007

The most authoritative map of North Korea on Google Earth
North Korea Uncovered v.7
Download it here

This map covers North Korea’s agriculture, aviation, cultural locations, manufacturing facilities, railroad, energy infrastructure, politics, sports venues, military establishments, religious facilities, leisure destinations, and national parks. It is continually expanding and undergoing revisions. This is the sixth version.

Additions to the latest version of “North Korea Uncovered” include: A Korean War folder featuring overlays of US attacks on the Sui Ho Dam, Yalu Bridge, and Nakwon Munitians Plant (before/after), plus other locations such as the Hoeryong Revolutionary Site, Ponghwa Revolutionary Site, Taechon reactor (overlay), Pyongyang Railway Museum, Kwangmyong Salt Works, Woljong Temple, Sansong Revolutionary Site, Jongbansan Fort and park, Jangsan Cape, Yongbyon House of Culture, Chongsokjong, Lake Yonpung, Nortern Limit Line (NLL), Sinuiju Old Fort Walls, Pyongyang open air market, and confirmed Pyongyang Intranet nodes.

Disclaimer: I cannot vouch for the authenticity of many locations since I have not seen or been to them, but great efforts have been made to check for authenticity. These efforts include pouring over books, maps, conducting interviews, and keeping up with other peoples’ discoveries. In many cases, I have posted sources, though not for all. This is a thorough compilation of lots of material, but I will leave it up to the reader to make up their own minds as to what they see. I cannot catch everything and I welcome contributions.

Posted in Architecture, Art, Automobiles, Aviation, Cell phones, Civil society, Coal, Committee for Cultural Relations with Foreign Countries, Communications, Computing/IT, Construction, Dams/hydro, Department Store No. 1, Education, Electricity, Email, Energy, Film, Finance, Football (soccer), Forestry, Gambling, General markets (FMR: Farmers Market), Golf, Google Earth, Hana Electronics Company, Health care, Hoteling, Hwanggumphyong and Wihwado Economic Zones (Sinuiju), Hyesan Youth Cooper Mine, International Aid, Internet, Intranet, Juche, Kaesong Industrial Complex (KIC), Kim Chaek University of Technology, Kim Il Sung University, Korea Computer Center (KCC), Korean Buddhist Association, Korean People's Army, Light Industry, Lumber, Mansudae creative Company (art studio), Manufacturing, Mass games, Maternity Hospital, Military, Mining/Minerals, Ministry of foreign Affairs, Ministry of Foreign Trade, Mt. Kumgang Tourist Special Zone, Musan Mine, Nuclear, Pyongyang Embroidery Institute, Pyongyang Film Studio, Pyongyang Informatics Center (PIC), Pyongyang International Information Center of New Techn, Pyongyang International Trade Fair, Pyongyang Metro, Pyongyang University of Medicine, Radio, Railways, Rason Economic and Trade Zone (Rajin-Sonbong), Real estate, Religion, Restaurants, Sea shipping, Sports, Television, Transportation, Wind | Comments Closed

The Great Leader Comrade Kim Il Sung will always be with us!

Friday, December 7th, 2007

Click on the image to see a larger picture. Google Earth Coordinates: 38.374935°, 127.103343°

As many readers know, I have been mapping out North Korea on Google Earth for some time. I have found numerous propaganda slogans displayed on hills and mountainsides throughout the country, but this recent discovery is by far the best example. I would like to see this carving from the ground, so if anyone has pictures, please send them to me.

Posted in Google Earth, Mt. Kumgang Tourist Special Zone, Political economy | Comments Closed

First-ever South Korean wedding held in North Korea

Sunday, December 2nd, 2007

Yonhap
Nam Kwang-sik
12/2/2007

The first South Koreans to tie the knot in North Korea wed in a ceremony at Mount Geumgang, a scenic North Korean mountain frequented by South Korean tourists, tour company Hyundai Asan said on Sunday.

Choe Jeong-in, a 32-year-old employee of Hyundai Asan, and Cho Ah-ra, 24, who works for one of Hyundai Asan’s business partners, married in a ceremony at a Mount Geumgang hotel on Saturday, three years after they first met while working at the North Korean resort.

Posted in Civil society, Dating/Courting, Mt. Kumgang Tourist Special Zone, Tourism | Comments Closed

Mt. Geumgang Tours See Ambitious 10th Year

Friday, November 16th, 2007

Korea Times
Ryu Jin
11/16/2007

The Mt. Geumgang tour business marks its ninth anniversary this Sunday. Hyundai Asan, the South Korean operator of the tour project to the resort mountain across the border in North Korea, says that it sees a more prosperous business for its 10th year.

Hyundai Asan is set to hold a ceremony to celebrate the anniversary, which comes after encouraging news such as the agreement with the North to open the 1,638-meter Biro-bong, the highest peak of the auspicious mountain, early next year.

According to the firm, a total of 1.72 million people have so far visited the “caged” area of the tightly controlled Stalinist nation over the past nine years since Nov. 18, 1998, when the cruise ship “Geumgang” arrived at the site for the first time.

A land route was opened through the heavily militarized border in 2003, terminating the cost-heavy sea travel from 2004 onwards. And North Korea opened more and more sites including “Naegeumgang” (the inner, western part of the mountain).

A company spokesman expects that the number of Mt. Geumgang travelers this year, which has already exceeded 300,000 as of October, to reach above 350,000 by the end of the year, a new record.

Hyundai Asan’s successful business, despite some political uncertainties in recent years, is largely due to its endeavors to diversify tours in the limited area of the 530-square kilometer mountain.

The Naegaumgang Tour, launched last June, added more prospects for South Korean climbers who until then could only enjoy “Oegeumgang” (the outer part of the mountain) and “Haegeumgang” (the seashore).

Beside, cultural events such as concerts as well as visits to hot springs and restaurants with unique Northern cuisine, an 18-hole golf course and a duty-free shop that opened in the resort area recently, will provide visitors with additional pleasures.

However, some experts point out that there remains much to be done in order for the Mt. Geumgang tourism business, which still remains largely a symbol of inter-Korean reconciliation, to be reborn as a more lucrative business.

The complicated processes of immigration control in addition to the long journey of 4-5 hours to the eastern coastal area are among major problems that should be addressed, along with the insufficient infrastructure such as hotel accommodation.

“We plan to expand facilities in the tourism zone further, as more visitors will come to the mountain when Biro-bong is opened next year,” the company spokesman said. “In particular, we will also pay attention to more safety measures.”

Posted in Economic reform, Mt. Kumgang Tourist Special Zone, Special Economic Zones (Established before 2013), Tourism | Comments Closed

North Korean Economy Watch