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DPRK central bank raises deposit rates and eases access to money

Sunday, March 6th, 2011

UPDATE: For the second time in as many weeks, the DPRK’s central bank makes the news. According to KCNA:

A national meeting of commercial officials took place at the People’s Palace of Culture on Monday.

The meeting reviewed the gains and experience made in the past commercial service and discussed tasks and ways for improving this work.

Present there were Premier Choe Yong Rim, Minister of Light Industry An Jong Su, Minister of Foodstuff and Daily Necessities Industry Jo Yong Chol, Chairman of the State Price Commission Ryang Ui Gyong, President of the Central Bank Paek Ryong Chon and other officials.

According to Yonhap, Paek Ryong Chon is the third son of the late foreign minister Paek nam-sun.

ORIGINAL POST: A big hat tip to Chris Green who translated an interesting article on recent changes to DPRK banking regulations. The original article in Korean is here.

According to Chris’ translation of the article:

The Chosun Central Bank is said to have raised interest rates by 1.8 times. Customers are also now able to get instant access to their money. As a result, the bank’s total deposits are also said to be growing.

These measures appear to be the bank coming forward to guarantee deposits given that people have been unwilling to put their money there since the 2009 currency redenomination.

North Korea watchers are observing the situation, saying that there is a chance that measures like these could be an indicator of financial sector reform.

Speaking on the 1st, one such source said, “I hear that the number of people putting their money in the bank is growing. The total reserves of the Chosun Central Bank are also growing. The causes of this are that access to withdrawals has recently been freed up and the interest rate has risen steeply.” According to the source, the interest rate offered by the bank was previously 3%, but has recently risen to 5.4%.

The Chosun Central Bank is a government entity under the Cabinet, doing the job of both a central and commercial bank at the same time. It offers savings, loans and insurance services.

North Korean people can deposit money there and earn interest on it; in this, it is much the same as the Post Office, which also takes deposits and gives interest.

In terms of allocation in North Korea, the state does it by force, and there are also cases of deposits being coerced. Indeed, until now it has been hard for North Korean people to recover capital deposited with the bank.

The source explained, “At times when the economic situation has been bad, it has not just been hard to get interest, it has even been common to illegally have to give 20% of the value of the capital to Central Bank management and then take the rest,” but added, “Recently, North Korean people have been able to get hold of their deposits surprisingly easily, and the rumor ‘We can get our money! And the interest has gone up!’ is going around.”

Cho Byung Hyun of the Industrial Bank of Korea’s research institute explained more, saying, “Following the failure of the 2009 currency redenomination, people disliked putting their money in the bank so, for the circulation of money, the bank instituted a policy of allowing instant access to deposits and raising interest rates.”

North Korea suffered serious fallout from the currency redenomination, including rapidly rising prices and the execution of its architect, former Workers’ Party financial planning head Pak Nam Gi.

However, it is also possible in part to interpret the failed redenomination as an opportunity to activate capitalist banking practices.

Cho went on, “We know North Korea has recently been preparing financial reforms. At the moment, banks under existing trade banks etc are controlled by the Central Bank, but this can be seen as propelling reform in the direction of giving independence to each bank.”

Meanwhile, Professor Lee Sang Min of Joongang University economics department pointed out, “This can be seen as helping with the introduction of a capitalist system in North Korea in the long term. It is an opportunity for the North Korean people to learn about a capitalist banking system.”

However, it is as yet too early to see this sort of phenomenon as meaning that the financial system of North Korea is settled. As one defector pointed out, “For this to develop into a system, the North Korean authorities shall have to spend a long time building trust.”

Another North Korea source added, “The dollar tended to be thought of by the North Korean people as the standard currency, but the Yuan is gradually moving to center stage.” This is analyzed by experts as being down to recent economic exchanges between the North and China and the rising value of the Yuan.

Fascinating stuff. Thanks for posting, Chris.

I am actually looking for information on the DPRK’s monetary system, so if you have any good papers, please send them my way.

Posted in Banking, Central Bank, Finance, Fiscal & monetary policy, State Fiscal and Financial Committee | Comments Closed

Defectors remit US$10m a year to DPRK

Wednesday, February 23rd, 2011

UPDATE 3 (2/23/2011): According to Yonhap:

A recent survey of North Korean defectors in South Korea showed Wednesday that a large number of them use part of their resettlement money from the government here to help their families in the North.

In the survey conducted in November by the Organization for One Korea, a group run by unification activists, 71 percent of 350 respondents said they have sent money back to the communist country before. About 66 percent of the cash remitters said that they used part of their money received from the South Korean government.

In an effort to buffer the initial costs of resettlement, the government here provides each defector with a subsidy of 6 million won (US$5,330) and partly finances their housing.

More than 20,000 North Korean defectors have arrived in South Korea since the 1950-53 Korean War ended in a truce. The number does not account for the estimated tens of thousands hiding in China.

According to the survey that had a margin of error of 3.59 percentage points, about half of the cash remitters said brokers took away 30 percent of their money sent to the North as a fee, while only 65 percent believed the remainder was entirely delivered.

North Korean defectors are 17 times likelier to depend on government allowances, according to the Unification Ministry. Over 50 percent of defectors depend on a universal welfare program that pays them about 400,000 won (US$355) a month.

Defections began to accelerate after a massive famine swept through North Korea in the mid-1990s, killing an estimated 2 million people. North Korea considers defectors criminals punishable even by death.

Read previous recent stories about remittances below.
(more…)

Posted in Banking, Black markets, Economic reform, Emigration, Finance, Fiscal & monetary policy, General markets (FMR: Farmers Market), South Korea | 1 Comment »

Office 38 reportedly back in business–and other changes

Sunday, February 20th, 2011

UPDATE 4 (2/20/2011): Kim Tong-un (김동은) named Kim Jong-il’s fund manager. According to Yonhap:

A senior official of North Korea’s ruling party has been named to lead a special party bureau, code-named Office 38, that oversees coffers and raises slush funds for its leader Kim Jong-il and the ruling elites, a source on North Korea said Sunday.

Kim Tong-un, formerly head of Office 39 in the Workers’ Party of Korea, assumed the post in May last year, when North Korea revived Office 38, which was merged with Office 39 in 2009, the source said on condition of anonymity. Office 39 is believed to be another organ that governs a wide network of business operations both legal and illegal.

Both Offices 38 and 39 belong to the Secretariat of the Workers’ Party, which Kim Jong-il chairs, according to a diagram of the North’s power structure released by the Unification Ministry, which handles inter-Korean affairs. Last year, the ministry had only included Office 39 in a similar diagram.

In a meeting with reporters last week, a ministry official said Office 38 has been spun off from Office 39 and is now running on its own again. The official, who would speak only on the condition of anonymity citing the sensitive nature of his comments, described “a stream of information” that has come through since mid-2010.

Office 38 mainly oversees transactions involving foreign currency, hotels and trade, the official said, while Office 39, headed by Jon Il-chun, drives revenue by dealing in narcotics, arms, natural resources and others.

The North’s revival of Office 38 is interpreted as an effort to cover the increasing cost of leader Kim Jong-il’s ceding of power to his youngest son, Jong-un.

The story was also reported in Yonhap.

UPDATE 3: Here are links to the Ministry of Unification‘s English language organization charts of the North Korean leadership in which some of the changes mentioned below are listed (though not all): Workers’ Party, State Organs, Parties and Organizations

UPDATE (2/15/2011): According to the Daily NK:

The number of Special Departments under the Secretariat of the Chosun Workers’ Party has been increased from 18 to 20, a move that includes the revival of the No. 38 Department, which previously served as Kim Jong Il’s private bank vault, and the foundation of a film department.

The Ministry of Unification revealed the news yesterday in its 2011 North Korean Power Structure and Index of Figures, Agencies and Organizations. It incorporates North Korean changes from December, 2009 up to the present day, completed after consultation with relevant agencies and experts.

The revival of the No. 38 Department and founding of a film department

The report states, “The No. 38 Department, which was merged with the No. 39 Department in 2009, was spun off again last year. Kang Neung Su, who was appointed Deputy Prime Minister in June of 2010, was introduced as head of the film department at the same time. The exact foundation date of the film department is unknown; however, it appears to be newly established.”

No. 38 and No. 39 Departments are directly controlled by Kim Jong Il and serve as a private vault for his ruling funds. The No. 38 Department manages hotels, foreign currency stores and restaurants etc, while illegal weapons trading through foreign trade companies, the smuggling of gold, illegal trade in drugs and the distribution of counterfeit dollars, so-called supernotes, are handled by the No. 39 Department.

“They combined two offices which had different functions, and it appears that this did not result in the intended efficiency,” a knowledgeable source commented.

Meanwhile, on the establishment of a film department, the source added, “North Korea’s cultural art is a political means by which to carry out Party policy and a policy tool to implant policy in the North Korean citizens.”

Among the reshuffled special departments, the existing ‘Munitions Industry Department’ has been renamed the ‘Machine Industry Department’, and the ‘Administration and Capital Construction Department’ has been scaled back to simply ‘Administration Department’.

Elsewhere, the existing National Resources Development and Guidance Department under the Ministry of Extractive Industries has been promoted to National Resources Development Council and, as reported, the Joint Investment Guidance Department rose to become the Joint Investment Committee, while the National Price Establishment Department became the National Price Establishment Committee. Again, as reported, the ‘People’s Safety Agency’ under the Cabinet became the People’s Safety Ministry under the National Defense Commission, while the Capital Construction Department was downsized to become the General Bureau of Capital Construction.

The Central Court and Central Prosecutors Office were also renamed the Supreme Court and Supreme Prosecutors Office respectively.

The Ministry of Unification report also notes that North Korea added Nampo City to its list of eleven cities and provinces, increasing the total number to twelve.

The newly designated Nampo City includes five former parts of South Pyongan Province; Gangseo, Daean, Oncheon, Yonggang, and Chollima districts. Previously, Nampo was under the direct control of the central government as part of South Pyongan Province proper.

At the same time, North Korea also transferred the existing Kangnam-gun, Joonghwa-gun, Sangwon-gun, and Seungho-district, all formerly southern sections of Pyongyang City, to North Hwanghae Province.

Military Commission placed under the Central Committee of the Party

The relationship of the Central Committee and Central Military Commission, which was formerly said to be in parallel, has been changed, reflecting the idea that the Military Commission is now under the Central Committee of the Party.

The Ministry of Unification commented, “By revising the Party regulations, the Central Military Commission and Central Committee were marked as parallel in 2009 and 2010. However, after confirming the revised Party regulations at the Chosun Workers’ Party Delegates’ Conference on September 28th last year, this relationship was adjusted, and an election is now held for the Central Military Commission via a plenary session of the Central Committee.”

Also, the ‘Bureau of General Staff’ under the National Defense Commission was judged to be below the Ministry of the People’s Armed Forces, but is now shown to be in a parallel relationship with the Ministry of the People’s Armed Force and ‘General Political Department’.

ORIGINAL POST (2/14/2011): According to Yonhap:

North Korea has revived a special party bureau, codenamed Office 38, that oversees coffers and raises slush funds for its leader Kim Jong-il and the ruling elites, South Korea said Monday in its annual assessment of the power structure in the communist country.

In 2009, the bureau had been merged with Office 39, another organ that governs a wide network of business operations both legal and illegal, according to the Unification Ministry in Seoul.

In a meeting with reporters, however, a ministry official said Office 38 has been spun off from Office 39 and is now running on its own again. The official, who would speak only on the condition of anonymity citing the intelligence nature of his comments, cited “a stream of information” that has come through since mid-2010.

The official would not elaborate on how the information has been obtained, only saying the ministry works closely with “related government bodies” to outline the North’s power structure.

Office 38, whose chief remains unknown, mainly oversees transactions involving foreign currency, hotels and trade, the official said, while Office 39, headed by Jon Il-chun, drives revenue by dealing in narcotics, arms, natural resources and others.

A source privy to North Korea matters said the spin-off suggests that North Korea has been experiencing difficulties in earning foreign currency since merging the two offices.

“Efficiency was probably compromised after the two, which have different functions, were combined,” the source said, declining to be identified citing the speculative nature of the topic. “More importantly, it seems related to the current state of foreign currency stocks. The North is apparently trying to address those difficulties.”

In August last year, the United States blacklisted Office 39 as one of several North Korean entities to newly come under sanctions for involvement in illegal deeds such as currency counterfeiting.

North Korea is also believed to have been hit hard financially after South Korea imposed a series of economic penalties last year on Pyongyang when the sinking of a warship was blamed on it.

Both Offices 38 and 39 belong to the Secretariat of the Workers’ Party, which Kim Jong-il chairs, according to a diagram of the North’s power structure released by the Unification Ministry. Last year, the ministry had only included Office 39 in a similar diagram.

Both offices have often been referred to as Kim Jong-il’s “personal safes” for their role in raising and managing secret funds and procuring luxury goods for the aging leader.

Read the full story here:
North Korea Splits No. 38 and 39 Departments Up Again
Daily NK
Kim So Yeol
2/15/2011

N. Korea revives ‘Office 38’ managing Kim Jong-il’s funds: ministry
Yonhap
Sam Kim
2/14/2011

Posted in Administration Department, Banking, Bureau 38, Bureau 39, Film, Finance, Fiscal & monetary policy, General Bureau of Capital Construction, International trade, Joint Venture Investment Committee (JVIC), Machine Industry Department, Ministry of People’s Security (Criminal Police), National Price Establishment Committee, National Resources Development Council, Secretariat, Supreme Court | 1 Comment »

Did Iran pay DPRK for arms via Seoul bank branch?

Tuesday, January 18th, 2011

The Choson Ilbo reports:

The [Wikileaks] cables say that North Korea received the arms payments through the Seoul branch of Iran’s Bank Mellat and that the U.S. government urged the South Korean government to investigate the matter. According to a cable dated March 24, 2008, a company in Iran called Hong Kong Electronics wired $2.5 million in three separate payments from Parsian Bank in Iran to the Seoul branch of Bank Mellat in November of 2007. Hong Kong Electronics is a paper company owned by North Korea’s Tanchon Commercial Bank. The money was wired entirely in euros, and $1.5 million worth of the payment was then wired to accounts in China and Russia.

Following a U.S. request to investigate, the South Korean government probed the Bank Mellat branch in December 2008 but did not take any punitive measures. Washington then demanded that the branch’s assets be frozen, according to a cable dated May 12, 2009.

The Iranians deny the accusations. According to the Joongang Ilbo:

Iranian Foreign Ministry Spokesman Ramin Mehmanparast rejected allegations that Iran transferred a large sum of money via the Seoul branch of Iran’s Bank Mellat to buy North Korean arms.

In an exclusive interview with the JoongAng Ilbo on Friday at the Iranian Embassy in Seoul, Mehmanparast stressed that Bank Mellat’s Seoul office ran its business “under the supervision of South Korean financial authorities.”

Iran’s new ambassador to South Korea, Ahmad Masoumifar, sat in on the interview.

Mehmanparast was in Seoul with seven Iranian journalists to improve relations with the Korean Ministry of Foreign Affairs and Trade.

The South Korean government in September slapped tough sanctions on Iran for its nuclear program, with penalties including the suspension of virtually all financial activities at the Seoul branch of Iran’s Bank Mellat.

The South Korean government said its actions complied with United Nations Security Council resolutions.

Q. Cables released by WikiLeaks suggested that North Korea likely received payment for weapons sold to Iran through Bank Mellat’s Seoul Branch.

A. I think there’s someone behind the allegations in regard to Wikileaks’ information on Iran. Bank Mellat operates abiding South Korean law. There’s nothing wrong with the bank. We do maintain diplomatic ties with the North Korean government. But Iran doesn’t damage (diplomatic) relations with one country for the sake of relations with another country.

Q. What about allegations that Iran and North Korea are cooperating on nuclear technology?

A. Iran and North Korea aren’t in a military alliance. Frankly speaking, when it comes to nuclear weapons, Iran doesn’t need other countries’ assistance.

Iran’s young scientists are in the process of successfully developing technology to use nuclear power in a peaceful manner.

Q. What’s Iran’s official position on North Korea’s attacks on the South Korean warship Cheonan and Yeonpyeong Island?

A. It was heartbreaking when I heard the news about the Yeonpyeong attack. I hope peace is maintained in Asia. I want to again stress peace through dialogue.

Q. Iran is an oil rich country. Why does it need nuclear power?

A. The Western media also questions why Iran needs nuclear power. But when you look at the world’s latest economic trends, nuclear power is (increasingly important) when used in a peaceful way. Even the United Arab Emirates began nuclear cooperation with the South Korean government.

Crude oil will be depleted in the future. Nuclear power is an answer to that, and it’s necessary for environmental reasons, too.

Q. Former Iranian Ambassador to Korea Mohammad Reza Bakhtiari said in a previous interview with our paper that Iran won’t sit back and watch if the South Korean government joins international sanctions against Iran.

A. That’s an uncomfortable question to answer. South Korea and Iran have lots in common as Asian nations. I hope for South Korean companies’ prosperity in Iran and I also hope for the success of Iranian companies in South Korea.

I hope short-term political pressures won’t hurt our bilateral relationship.

Read the full stories here:
N.Korean Arms Payments ‘Passed Through Seoul’
Choson Ilbo
1/18/2011

‘Bank Mellat didn’t pay for arms from North Korea’
Joongang Ilbo
Chun Su-jin
1/24/2011

Posted in Arms shipment, Banking, Finance, Illicit activities, Iran | Comments Closed

Daedong Credit Bank press release

Sunday, January 16th, 2011

The Daedong Credit Bank (Based in the Potonggang Hotel in Pyongyang) has issued a press release.

I have made a PDF of it available here.

Here is their web page.

Posted in Banking, Daedong Credit Bank, Finance, Foreign direct investment | Comments Closed

Daedong Credit Bank Press Release

Monday, December 20th, 2010

On November 18, 2010, the US Treasury Department issued the following press release:

Treasury Designates Key Nodes of the Illicit Financing Network of North Korea’s Office 39

WASHINGTON – The U.S. Department of the Treasury today designated Korea Daesong Bank and Korea Daesong General Trading Corporation pursuant to Executive Order (E.O.) 13551 for being owned or controlled by Office 39 of the Korean Workers’ Party. Office 39 is a secretive branch of the government of the Democratic People’s Republic of Korea (North Korea) that provides critical support to North Korean leadership in part through engaging in illicit economic activities and managing slush funds and generating revenues for the leadership. Office 39 was named in the Annex to E.O. 13551, issued by President Obama on August 30, 2010, in response to the U.S. government’s longstanding concerns regarding North Korea’s involvement in a range of illicit activities, many of which are conducted through government agencies and associated front companies. Korea Daesong Bank is involved in facilitating North Korea’s illicit financing projects, and Korea Daesong General Trading Corporation is used to facilitate foreign transactions on behalf of Office 39.

“Korea Daesong Bank and Korea Daesong General Trading Corporation are key components of Office 39′s financial network supporting North Korea’s illicit and dangerous activities,” said Under Secretary for Terrorism and Financial Intelligence Stuart Levey. “Treasury will continue to use its authorities to target and disrupt the financial networks of entities involved in North Korean proliferation and other illicit activities.”

E.O. 13551 targets for sanctions individuals and entities facilitating North Korean trafficking in arms and related materiel; procurement of luxury goods; and engagement in certain illicit economic activities, such as money laundering, the counterfeiting of goods and currency, bulk cash smuggling and narcotics trafficking. As a result of today’s action, any assets of the designated entities that are within U.S. jurisdiction are frozen and U.S. persons are prohibited from conducting financial or commercial transactions with these entities.

You can learn more about the Treasury’s press release here.

Here is the US Treasury Department’s new North Korea resource page.

In response, the Daedong Credit Bank issued the following press release:

FOR IMMEDIATE RELEASE:

US Treasury Press Release 18th November 2010

London UK/Pyongyang DPRK, December 20th 2010

Daedong Credit Bank (DCB) has noted the press release of 18th November 2010 by the US Treasury and makes the following comments:

1.    Korea Daesong Bank (KDB) is a 30% shareholder in DCB. DCB is not, and never has been, aware of any activity by KDB which is in breach of any of its obligations, domestic or international. In particular, DCB is not aware of KDB having acted in breach of any sanctions. DCB is not aware of any cause of concern about the conduct of KDB.

2.    KDB has no executive control of DCB.

3.    DCB is majority owned by overseas investors and is foreign-managed.

4.    DCB does not act and has never acted in breach of any of its domestic or international obligations. DCB acts in a manner consistent with domestic and international law.

5.    DCB is apolitical and promotes foreign investment in the DPRK as a positive development.

The Daedong Credit Bank looks forward to playing a significant part in facilitating normal commercial relationships between the DPRK and the international business community.

About Daedong Credit Bank

Daedong Credit Bank is a joint venture retail bank based in Pyongyang. It was established in 1995 as “Peregrine Daesong Development Bank”. The Bank underwent a change of name and foreign ownership in 2000.

Daedong Credit Bank is the first, by fifteen years, foreign majority held bank in the DPRK. DCB considers itself a flagship successful joint venture in the DPRK, and a key part of the infrastructure needed to assist the foreign-invested ventures, which drive the country’s economic reforms.

The bank’s principal function is to offer normal “high street” banking facilities in hard currency to; foreign companies, joint ventures, international relief agencies and individuals doing legitimate business in the DPRK.

Daedong Credit Bank was the first bank in the DPRK to introduce, and vigorously implement, a comprehensive set of anti-money laundering procedures. DCB’s anti-money laundering procedure manual was introduced seven years ago, and subsequently updated based on anti-money laundering guidelines provided by the Asian Development Bank. The manual has been sent to, and accepted by, DCB’s international correspondent banks.

Daedong Credit Bank also maintains strict procedures for the detection and rejection of counterfeit bank notes; it uses regularly updated note checking machines, and has personnel with over 10 years’ of experience of handling notes. DCB have encountered and impounded the so-called ‘superdollar’ notes, proving that these notes (despite media misconceptions) are not undetectable.

The wealth of experience garnered over Daedong Credit Bank’s 15 years of successful operation is unrivaled.

Daedong Credit Bank has a significantly strong position in relation to the future economic development of the DPRK and, being the oldest established foreign invested commercial bank in the DPRK, it is the intention of the bank to capitalise on these advantages.

CONTACT INFORMATION:

Daedong Credit Bank office address in Pyongyang is:

Daedong Credit Bank
401, Potonggang Hotel
Ansan-dong
Pyongchon District
Pyongyang
Democratic People’s Republic of Korea

Phone Switchboard +850 2 381 2228/9    ext 401
Direct line     +850 2 381 4866
Mobile          +850 193 801 8400 *
*Note, the mobile number may not be obtainable from certain countries (eg UK and Hong Kong).
Corporate Website www.daedongcreditbank.com

FOR IMMEDIATE RELEASE:

US Treasury Press Release 18th November 2010

London UK/Pyongyang DPRK, December 20^th 2010

Daedong Credit Bank (DCB) has noted the press release of 18th November 2010 by the US Treasury and makes the following comments:

1. Korea Daesong Bank (KDB) is a 30% shareholder in DCB. DCB is not, and never has been, aware of any activity by KDB which is in breach of any of its obligations, domestic or international. In particular, DCB is not aware of KDB having acted in breach of any sanctions. DCB is not aware of any cause of concern about the conduct of KDB.

2. KDB has no executive control of DCB.

3. DCB is majority owned by overseas investors and is foreign-managed.

4. DCB does not act and has never acted in breach of any of its domestic or international obligations. DCB acts in a manner consistent with domestic and international law.

5. DCB is apolitical and promotes foreign investment in the DPRK as a positive development.

The Daedong Credit Bank looks forward to playing a significant part in facilitating normal commercial relationships between the DPRK and the international business community.

About Daedong Credit Bank

Daedong Credit Bank is a joint venture retail bank based in Pyongyang. It was established in 1995 as “Peregrine Daesong Development Bank”. The Bank underwent a change of name and foreign ownership in 2000.

Daedong Credit Bank is the first, by fifteen years, foreign majority held bank in the DPRK. DCB considers itself a flagship successful joint venture in the DPRK, and a key part of the infrastructure needed to assist the foreign-invested ventures, which drive the country’s economic reforms.

The bank’s principal function is to offer normal “high street” banking facilities in hard currency to; foreign companies, joint ventures, international relief agencies and individuals doing legitimate business in the DPRK.

Daedong Credit Bank was the first bank in the DPRK to introduce, and vigorously implement, a comprehensive set of anti-money laundering procedures. DCB’s anti-money laundering procedure manual was introduced seven years ago, and subsequently updated based on anti-money laundering guidelines provided by the Asian Development Bank. The manual has been sent to, and accepted by, DCB’s international correspondent banks.

Daedong Credit Bank also maintains strict procedures for the detection and rejection of counterfeit bank notes; it uses regularly updated note checking machines, and has personnel with over 10 years’ of experience of handling notes. DCB have encountered and impounded the so-called ‘superdollar’ notes, proving that these notes (despite media misconceptions) are not undetectable.

The wealth of experience garnered over Daedong Credit Bank’s 15 years of successful operation is unrivalled.

Daedong Credit Bank has a significantly strong position in relation to the future economic development of the DPRK and, being the oldest established foreign invested commercial bank in the DPRK, it is the intention of the bank to capitalise on these advantages.

CONTACT INFORMATION:

Daedong Credit Bank office address in Pyongyang is:

Daedong Credit Bank
401, Potonggang Hotel
Ansan-dong
Pyongchon District
Pyongyang
Democratic People’s Republic of Korea

Phone

Switchboard +850 2 381 2228/9 ext 401
Direct line +850 2 381 4866
Mobile +850 193 801 8400 *
*Note, the mobile number may not be obtainable from certain countries (eg UK and Hong Kong).

Corporate Website www.daedongcreditbank.com

#004

Posted in Banking, Bureau 39, Daedong Credit Bank, Daesong Bank, Daesong-BAT JV Company, Finance, Foreign direct investment, USA | Comments Closed

DPRK bank transfers for nuclear program alarms EU

Thursday, December 2nd, 2010

According to Bloomberg:

North Korea’s use of international banks to facilitate nuclear weapons-related trade requires financial institutions to step up their vigilance, the European Union said.

North Korea exports $100 million in weapons and missiles each year in violation of United Nations sanctions, a UN panel wrote in a report released on Nov. 10. The EU said it’s concerned that some of the country’s trade involves prohibited nuclear technologies.

The 27-nation EU today urged all members of the International Atomic Energy Agency to “exercise particular vigilance over exports and financial transfers” in order “to prevent a contribution to proliferation-sensitive activities.”

Tensions with North Korea have increased in recent weeks. The country has built a new facility for extracting uranium, the key ingredient for nuclear weapons, a U.S. scientist reported on Nov. 20. Three days later, North Korea fired artillery at Yeonpyeong island, killing soldiers and civilians.

North Korea’s new nuclear facilities “could bolster its pursuit of a weapons capability and increases our concerns about prospects for onward proliferation of fissile material and of sensitive technologies to other parties,” U.S. Ambassador Glynn Davies said in a statement at IAEA’s meeting in Vienna.

The U.S. has been pressuring banks to cut ties with the North Korea’s regime, State Department documents posted today on WikiLeaks.org showed.

Reputation

Austria’s Financial Market Authority told the U.S. that it “exercised additional surveillance regarding North Korean financial activities” and that one bank cut ties with the country “to maintain its good reputation,” according to a February 2006 cable.

The U.S. and Japan will hold a week of naval drills beginning tomorrow. The aircraft carrier USS George Washington will join a force of about 400 aircraft and 60 warships. Drills will include responding to ballistic missile attacks on Pacific islands, the Joint Staff of the Japan Self-Defense Forces said in a statement.

“We will not accept North Korea as a nuclear-weapon state,” Davies said. “We seek an immediate halt of all nuclear activities in North Korea, including enrichment.”

Recent posts about the DPRK’s nuclear program can be found here.

Recent posts on Yonpyong can be found here.

Read the full story here:
North Korean Use of Bank Transfers for Atomic Work Alarms Europe
Bloomberg
Jennifer M. Freedman, Andrew Atkinson
12/2/2010

Posted in Banking, EU, Finance, Fiscal & monetary policy, Nuclear | Comments Closed

KJU and the realignment of patronage

Tuesday, November 9th, 2010

According ot the Daily NK:

The rapid ascent of Kim Jong Eun and the building of a new ruling cast in Pyongyang is causing ripples to be felt in North Korea’s foreign currency earning apparatus. In Beijing, it is clear that anyone considered a supporter of Kim Jong Nam or Oh Keuk Ryul faces a rough ride.

One of the most prominent cases is that of Kang, a pro-Kim Jong Nam foreign currency earner who has distinguished himself in various ways, including by installing air conditioning in the Mansudae Assembly Hall. He is noteworthy among North Korea trade workers in China, and was mentioned in articles released by The Daily NK in June on the subject of emergency inspections over North Korean trade departments.

According to the testimony of Kang’s acquaintances, Kang was supposedly summoned to Pyongyang in early July, whereupon he was violently beaten by agents of the National Security Agency. The alleged reason behind the summons was that Kang was guilty of embezzling national assets and corruption; however, trade workers in China generally assume that it was a part of systematically “taking care” of Kim Jong Nam‘s closest associates.

In North Korean diplomatic circles in Beijing, the general interpretation is that Kim Jong Nam‘s outspoken negativity towards North Korea‘s third generation succession has helped to bring trouble upon his supporters.

One Chinese building contractor, Jwa, who sells construction materials to North Korean traders, commented, “Kang pledged allegiance to Kim Jong Nam and received a lot of favors as his affiliate. But a battle between Kim Jong Eun and Kim Jong Nam is taking place, and trade workers are suffering.”

However, the more surprising fact was the return of Kang to Beijing in October. It is highly unusual for someone from a privileged office to be so severely “investigated” by the National Security Agency but then return to their former seat in a foreign trade office.

According to one of Kang’s acquaintances, this was down to the fact that he is actually the person in charge of the North Korean Liaison Office in Beijing.

One Chinese trader who has done business directly with Kang told The Daily NK, “Kang, who is well known as a famous trade worker, was really in charge of North Korean maneuvers for more than ten years while maintaining the identity of a trade worker. This fact has been confirmed through several sources.”

However, South Korean intelligence has neither confirmed nor denied Kang’s true role.

The North Korean Liaison Office is an organization said to be responsible for maneuvers against South Korea, and is thought to have pulled the strings in the South Korean Chosun Workers‘ Party incident of 1992, in which the largest spy ring since the liberation was uncovered, that of Kim Dong Sik, an armed espionage agent arrested in 1995, Choi Jung Nam and Kang Yeon Jung, an agent couple who committed suicide in 1997, the assassination of Lee Han Young, Kim Jong Il’s nephew, in 1997, and the 2006 Ilsimheo spy ring incident.

Mr. Kang also owns a well-appointed villa, recent sedan and VIP membership of the fitness center at a five-star hotel.

Generally, North Korean employees abroad have to leave one of their children in Pyongyang as what can only be described as hostages to loyalty. However, the testimony of Kang’s acquaintances states that he is permitted to live in Beijing with his wife, daughter and son, who has studied in England. This is due to Kim Jong Nam’s full support, an extraordinary level of operational funding and the superior status of a person in charge of a covert operation.

He has avoided being outright purged, despite the fact that he is an affiliate of Kim Jong Nam, thanks to the fact that he is the person in charge of operations against the South. However, other trade workers in China who are also affiliated with Kim Jong Nam are desperate to forge new connections in Pyongyang to secure their positions, and, as such, many seem to have been absorbed by the Jang Sung Taek camp.

Other overseas officials are also on the back foot. Not only are affiliates of Kim Jong Nam being called into Pyongyang, but affiliates of Oh Keuk Ryul, a Vice Chairman of the National Defense Commission who is also actively involved in bringing foreign capital into North Korea in de facto competition with Jang Sung Taek, are also being summoned. Oh Keuk Ryul was shut out of the recent process of realigning the Chosun Workers’ Party and has lost a lot of his former influence as a result.

North Korean foreign trade departments are a target of veneration within North Korea. However, trade workers must strive to preserve their status with bribes like supplies which are hard to find within North Korea or large amounts of money. Now the dynamic is changing, so it is proving difficult to preserve their desirable positions.

Read the full story here:
Traders Living in Fear of Pyongyang Summons
Daily NK
Shin Joo-hyun
11/8/2010

Posted in Banking, China, Construction, Finance, Fiscal & monetary policy, International trade, Kim Jong Un, Political economy | 1 Comment »

Daily NK: New Zealand halts beef exports to DPRK

Friday, November 5th, 2010

According to the Daily NK:

It has been confirmed by The Daily NK that North Korea failed in a recent attempt to import beef from New Zealand for the purpose of providing special gifts to cadres on Kim Jong Eun’s birthday, January 8, after the plan ran afoul of the New Zealand government, which froze the funds.

According to a source from North Korea today, “$170,000 remitted by ‘Myohyang Bureau’ to a New Zealand bank in October to import parts for Japanese tourist buses and beef has been frozen by the New Zealand authorities.”

The source added, “The New Zealand authorities are investigating whether or not the money is related to (North Korea’s) drug dealing.”

The source explained, “The beef is for special distribution to cadres on the Youth Captain (Kim Jong Eun)’s birthday, while the parts of Japanese buses are to repair buses operated by the Tour Bureau,” adding, “Myohyang Bureau is alarmed that there might be a snag in Comrade Youth Captain’s birthday special distribution.”

In North Korea, workplaces have already started to prepare presents for Kim Jong Eun’s birthday. There are two types of presents: the first is from cadres to Kim Jong Eun; and the latter is special distribution to cadres in Kim Jong Eun’s name. However, even though the special distribution is like a gift handed out by a monarch, factories and Party organs have to prepare it. According to the source, the Myohyang Bureau’s duty this time is to supply beef.

The Myohyang Bureau is directly in charge of tour events including Arirang performance-related tours and Mt. Baekdu and Geumgang tours. It sends the profits from these businesses involving foreign tourists to the No. 39 Department of the Central Committee of the Party.

The source explained further, “Due to Japanese sanctions against North Korea, the Tour Bureau has not been able to obtain parts for Japanese buses, so the Myohyang Bureau asked a New Zealand business partner to obtain them for them. In doing that, they also asked for beef.”

“Since the Myohyang Bureau sent the money via a secret bank account held with a bank in Latvia to a bank in New Zealand, it incurred the suspicion of the New Zealand government. Money is still money, but the bigger problem is to expose the Latvian account.”

This is the first time that a Latvian account has been linked to North Korea, adding to known secret accounts in Switzerland, China, Macau and the Caribbean.

The source said, “The Myohyang Bureau opened the account in the name, ‘RUSKOR International Company Ltd’ in a bank of Latvia,” adding, “The account name is the connecting of the words Russia and Korea.”

“Gift rations” have been in the news a lot lately. Links to previous posts about the DPRK’s “gift rations” can be found here.

Read the full story here:
North Korean Funds for Beef Frozen by New Zealand
Daily NK
Park In Ho
11/5/2010

Posted in Banking, Finance, Food, International trade, Kim Jong Un, New Zealand, Political economy, RUSKOR International Company Ltd | Comments Closed

Prices and DPRK/$USD exchange rate

Thursday, October 21st, 2010

According to Bloomberg:

The two sides of Chang Gwang Street (Satellite image here) in North Korea’s capital of Pyongyang show the gap between the Stalinist country’s elites and its capitalist-minded citizens. On one side, English-speaking officials mingle with Dutch traders at the Koryo Hotel. There, those with foreign currency can buy Heinekens for about a buck a can at the official exchange rate of 100 North Korean won to the U.S. dollar.

Across the street, a saleswoman at one of the private markets still allowed by the authorities giggles when a foreign guest says he doesn’t have the 200 won needed to buy a steamed vegetable bun. She flips the placard to reveal the cost in dollars, the currency of a country that doesn’t have diplomatic ties with North Korea. The price: 20 cents, implying an unofficial exchange rate of 1,000 won to the dollar.

Old Asia hands say this is one of the biggest spreads between the official and unofficial currency rate they have ever seen in the region. Back in the 1980s the gap between the official and market rates in China was not nearly as great as in North Korea today, says Ken Dewoskin, a director of Deloitte’s China Research and Insight Center in Beijing, who began his career watching China in the mid-1960s and first traveled there in 1977. “Even closed economies like Cambodia in the 1960s had only a 2-to-1 pricing discrepancy,” he says.

President Kim Jong Il moved late last year to revalue the won and limit the amount of cash that North Koreans could exchange for newly printed bills. The policy was designed to clip the wings of the private merchants who were increasingly creating an economy beyond the control of the authorities, according to the University of Vienna’s Rüdiger Frank, a political scientist who specializes in North Korea. The impact of the abrupt policy shift extended far beyond the merchants. “The revaluation not only wiped out people’s savings, but their trust in the government and their currency,” says Ha Tae Keung, founder of Open Radio for North Korea. “There’s a widespread belief among North Koreans that their money is going to get further devalued and they’ll get poorer just by holding onto it.”

The currency turmoil came amid mounting speculation that Kim Jong Il’s health was failing. Last month he promoted his son, Kim Jong Un, to four-star general, setting the stage for the country’s second hereditary power transfer. The government extended an unprecedented invitation to international media to witness the Oct. 10 anniversary celebrations marking the 65th anniversary of the Workers’ Party of Korea.

The next day, Pyongyang residents queued up as usual to spend their won at the Chang Gwang Street market. Twenty-four shoppers patiently lined up to buy a small cone of vanilla ice cream at 20 won each. A similar number waited for shaved ice with sweet bean paste at 5 won a bowl. Fifteen were there to buy sweet potatoes at 60 won per kilo. No one was seen lining up to purchase sausages, which at 1,700 won each were priced at the equivalent of 16 cans of Heineken beer at the Koryo Hotel.

While price tags at the hotel are in won, the national currency isn’t accepted there. That wasn’t a concern for guests and shoppers buying foreign goods—Scotch whisky and Syrian olive oil were on offer—with dollars, euros, and Chinese yuan.

One hotel worker, who said he made about 2,500 won a month, said the government provided people with food and other necessities such as clothing and housing. The free markets like the one across the street were there to supplement their diets, he said, adding: “We don’t operate like a capitalist country.”

Read the full story here:
In Pyongyang, the Dollar Commands Respect
Bloomberg
Michael Forsythe, Bomi Lim, Frances Yoon and Zeb Eckert
10/21/2010

Posted in Banking, Finance, Fiscal & monetary policy, General markets (FMR: Farmers Market), Price liberalization | Comments Closed

North Korean Economy Watch