Archive for the ‘International trade’ Category

Chinese oil exports to N Korea increased after KJU’s third visit to China

Thursday, July 19th, 2018

Benjamin Katzeff Silberstein

Says Chosun Ilbo:

Though the exact figure is not known, China sent an estimated 200,000 to 300,000 tons of fertilizer to the North, according to sources in China.

In 2013, China supplied the North with 200,000 tons of fertilizer. Kwon Tae-jin of the GS&J Institute, an agricultural think tank in Seoul, said, “There are different ways of calculating harvest rates for different types of fertilizer and soil. But in case of urea fertilizer, it’s possible to produce two tons of food more for each ton of fertilizer.”

[…]

China also dramatically increased oil shipments to the North. A source in Beijing said it nearly doubled crude oil supplies to the North through pipelines from Dandong since Kim’s recent visits.

“Some 30,000 to 40,000 tons of oil is enough in the summer to maintain the lowest possible flow of oil in the pipelines to ensure that they don’t clog, and about 80,000 tons in winter,” the source added. “Though it’s summer now China has recently increased flow to the winter level.”

Full article/source:
China Doubles Oil Shipments to N.Korea After Kim’s Visit
Lee Kil-seong and Kim Myong-song
Chosun Ilbo
2018-07-19

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South Korean companies gearing up to rush north, part x

Wednesday, July 18th, 2018

Benjamin Katzeff Silberstein

Hardly a day goes by without a new article on South Korean companies or business interests eyeing investments in North Korea as a golden opportunity. Here’s the Korean Tourism Association (from Joongang Daily):

Attracting both local and foreign travelers to lesser-known mountains and rivers across the peninsula is one of the goals of the Korea Tourism Organization under its newly appointed president Ahn Young-bae.

In the spirit of easing tensions between North and South Korea, Ahn plans to set up a team that will focus on promoting travel throughout both countries.

“If the relationship between the South and North [improves], ‘peace travel’ will really start to take off,” said Ahn during his first press conference, adding that this is one way to develop unique tour programs that can appeal to many travelers.

To develop new ideas to make the tourism industry in Korea more sustainable, Ahn also plans to set up a new tourism big data center. Here, he said, one can find out which areas are becoming popular vacation spots and what travelers are purchasing during their time away from home so that the travel industry can set up better marketing strategies. While a future management team, another initiative Ahn plans to start, will focus on how to make such changes, a value management team will conduct research based on the data and present their findings to the organization.

Full article:
KTO sees opportunity up North : New president plans to use big data to improve local tourism
Lee Sun-Min
Joongang Daily
2018-07-18

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Crackdowns in North Korea continue against “anti-socialist elements”

Monday, July 16th, 2018

By Benjamin Katzeff Silberstein

The wave of crackdowns against “anti-socialist” activity in North Korea following the spring of summitry continues. The latest report by Daily NK (below) focuses on crackdowns against those breaking the economic rules in fishing villages. This all highlights a central problem with North Korea’s often ad-hoc marketization process: much of the space the state grants for economic activity beyond its reach, it can quickly take away whenever it sees fit:

While there are signs that the ‘anti-socialist’ crackdown by the North Korean authorities has slowed in recent days, sources have reported that crackdowns are still occurring in the fishing communities of North Hamgyong Province.

“There was a crackdown on a fishing company in Hamgyong Province that owned more fishing boats than it had registered with the state,” said a source in North Hamgyong Province on July 11.

“The boats that were registered with the state sent the required amount of fish to the government, while the catch from the unregistered boats was sent somewhere else. The company is getting punished for this.”

An inspection revealed that the fishing company had only 30 ships registered, but was actually operating more than 300 small fishing boats.

“The authorities are angry because they confirmed the number of unregistered fishing boats across North Hamgyong Province to be around 2,300,” said a separate source in North Hamgyong Province. “The authorities confiscated all of the unregistered boats and handed them over to the province’s major fishing enterprise. The state also ordered that all the fishing boat captains are to be replaced.”

There are still crackdowns on illegal activities in places that the authorities have designated as “problem areas.” The crackdown on the unregistered fishing boats has led to anger from fishermen in the towns.

The article also gives a clue to one of the sources of the so-called “ghost ships” that arrived on Japanese shores over the past year or so:

Locals are complaining that it is difficult for their small boats to fulfill the harvest quotas set by the government set and that the state is only focused on meeting those quotas with registered boats. Fishing boat operators contend that they risk their lives to earn a living and are being treated unfairly by the state.

“We have to catch seven tons of squid or sailfin sandfish during the harvest seasons, but we can’t catch even half of that in our small boats […] The state is calculating that the large number of unregistered boats means that fishing companies are fishing a lot and making a significant amount of money, but in fact fishing with such small boats means that we cannot catch much at all,” the second source quoted one captain as saying.

This source also stated that the crackdown has led to the firing of several fishing boat captains. “[The captains] just stare out to sea and are at a loss for what to do,” he said.

“They receive no rations from the state and are just eking out an existence. The crackdown has led to the collapse of the base of the fishing industry in the region.”

The initial source also said that captains that had purchased their own boats are unable to get any financial return on them.

“Many of them are complaining that nothing they do helps them make a living and are unsure how they will survive,” he said.

Article source:
North Korean authorities continue crackdowns in fishing villages
Ha Yoon Ah
Daily NK
2018-07-16

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South Korea, North Korea and Russia discuss railway cooperation

Sunday, July 15th, 2018

Benjamin Katzeff Silberstein

Trilateral cooperation discussions on the cross-peninsular railway happened in Rason despite Russia’s earlier cancellation:

A group of representatives from South Korea’s presidential panel returned home Sunday after a trip to North Korea, where they discussed possible trilateral economic cooperation involving the two Koreas and Russia, its official said.

The Presidential Committee on Northern Economic Cooperation sent an 11-member team led by committee chairman Song Young-gil to the North’s northeastern border region of Rason. They stayed there for two days from Friday.

The team originally planned to attend a seminar hosted by Russia to discuss trilateral economic cooperation involving the two Koreas and Russia but canceled its participation. Instead it had discussions with North Koreans and Russians on the Rajin-Khasan project and other issues, the official said.

Rason, formerly known as Rajin and Sonbong, was designated as a special economic zone in 1991. The North has sought to develop the zone by drawing outside investment but faced setbacks amid its continued provocations.

The Rajin-Khasan project, in particular, is a logistics project aimed at transporting coal from Russia to the North by using a 54 km-long railway linking Khasan in Russia to the Rajin port of North Korea and then to South Korea by ship.

There have been test operations of the transport route three times, including the latest one in November 2015.

The trilateral cooperation project, however, has been put on hold as South Korea banned maritime transport from the North in early 2016 in the wake of the North’s nuclear and missile provocations.

South Korea and the United States have said that full-fledged economic cooperation with the North should wait until it carries out its promised “complete denuclearization.”

“The Rajin-Khasan project is not subject to U.N. sanctions but to sanctions imposed by the U.S. So we plan to draw up and propose a broad picture and make preparations for joint study until there is progress in denuclearization and discussion begins on lifting those sanctions,” the panel official said.

Article source:
Presidential panel discusses Rajin-Khasan cooperation during trip to N.K.
Yonhap News
2018-07-15

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Reopening Kaesong key to cooperation, says ROK gov’t official

Friday, July 13th, 2018

Benjamin Katzeff Silberstein

A South Korean official (albeit one specifically representing the interests of the zone) calls re-opening Kaesong a “first step” towards resumed inter-Korean economic cooperation. Yonhap:

A South Korean official in charge of promoting investments in North Korea’s Kaesong Industrial Complex said Friday that the reopening of the now-suspended industrial park in the North’s border town will be a first step towards resuming inter-Korean economic cooperation.

Addressing a unification symposium in Seoul, Kim Jin-hyang, chairman of the Kaesong Industrial District Foundation, said the operation of the Kaesong complex has to be restarted as quickly as possible.

“Inter-Korean economic cooperation cannot be discussed without the Kaesong Industrial Complex,” said Kim, who doubles as chief of the Kaesong Industrial District Management Committee.

The government of former President Park Geun-hye abruptly announced the closure of the Kaesong park on Feb. 10, 2016, in retaliation for the North’s fourth nuclear weapons test and long-range missile launch.

Kim dismissed the abrupt closure of the complex as a “completely failed policy,” saying, “The decision was a grave disaster that shut down peace, economy and security altogether. North Korea was never dealt a blow when the Kaesong park was closed.”

“The Kaesong complex was not a special favor to the North. It was intended to support the South Korean economy stuck in a low-growth trap,” he said.

Kim noted that the Kaesong park is also very symbolic in terms of security and peace, arguing that the mix of about 60,000 South and North Korean workers in a single location can deter tensions and guarantee peace.

He stressed that South Korea should now join Singapore, Russia and China in preparing for large-scale investments in North Korea following its successive summit talks with the United States and South Korea to enhance the peace mood on the Korean Peninsula.

Article source:
Reopening of Kaesong Industrial Complex key to inter-Korean cooperation: official
Yonhap News
2018-07-13

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North Korea likely did 89 illegal ship-to-ship transfers in 2018, says U.S. data

Friday, July 13th, 2018

Benjamin Katzeff Silberstein

Reports Chad O’Carroll over at NK News:

North Korea likely conducted at least 89 ship-to-ship transfers to illicitly obtain refined petroleum products between January 1 and May 30, U.S. data provided to the United Nations and seen by NK News on Friday claims.

Pyongyang may have illegally imported up to 1,367,628 barrels of refined petroleum as a result of the transfers, upper-end estimates suggested, over double the 500,000 barrels authorized for export to North Korea each year by current UN sanctions.

Consequently, the U.S. recommended that the UN 1718 sanctions committee issue a “public note verbale to all UN Member States to inform them that the DPRK has breached the UNSCR 2397 OP5 refined petroleum product quota for 2018,” and that all countries should “order an immediate halt to all transfers of refined petroleum products to the DPRK.”

Since the May 30 data cut-off, the Japanese government has revealed details surrounding three extra cases of North Korean vessels caught conducting likely ship-to-ship transfers, with two on June 21 and June 22, and one on June 29.

North Korean skippers are thought to be conducting the at-sea transfers of fuel products to circumvent UN sanctions designed to limit how much Pyongyang can import each year.

Two countries were also flagged in the U.S. report for their role in provisioning on-the-books exports of petrol products supplementary to the barrels illicitly acquired through ship-to-ship transfers.

“As China and Russia have reported to the UN 1718 Committee in 2018, both member states continue to sell refined petroleum products to the DPRK,” the report said.

“These sales and any other transfer must immediately stop since the United States believes the DPRK has breached the UNSCR 2397 refined petroleum products quota for 2018.”

To evidence its claims, the U.S. included satellite imagery of four vessels described as either “likely in the process of delivering” or “delivering refined petrol products” that were “procured via illicit ship-to-ship transfer” at Nampo Port on the DPRK’s west coast.

Full article and source:

N. Korea likely conducted 89 illicit ship-to-ship transfers in 2018: U.S. data
Chad O’Carroll
NK News
2018-07-13

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North Korean-Chinese efforts at scaling back sanctions

Tuesday, July 3rd, 2018

Benjamin Katzeff Silberstein

The following is from Mainichi Shimbun on a North Korean economic delegation trip to China, where it supposedly met with Chinese foreign ministry officials to discuss economic cooperation. Since I don’t read Japanese, I’ve pasted what google translate generated, mostly for my own record-keeping…

[Beijing / Urushima Koji] China has activated diplomatic offensives toward easing sanctions against North Korea. At the end of June, at the end of June, a draft statement for the media to seek relief of sanctions on the UN Security Council was distributed to the Security Council with Russia. At the working-level level in the mid-day and the morning, North Korea’s Kim Bong-tae and foreign minister of foreign affairs have accepted the visit and it seems that they are discussing economic support with a view to easing sanctions due to denuclearization.

According to a source in the middle of the morning, Mr. Kim arrived at Pyongyang airport from Pyongyang this morning. Mr. Kim is said to have been in China, who has led the economic delegation to visit. China’s Ministry of Foreign Affairs Mr. Rikuo avoided confirming the visiting information at a regular press conference the same afternoon, but on the other hand, “While the middle morning is a friendly neighboring country, each level, normal in each field We are maintaining a regular visit. ”

Following the US-North Korea summit meeting in Singapore, China is expected to ease sanctions ahead of the United States and it is believed that it is aimed at advancing negotiations with the US with trade friction etc. advantageously by placing North Korea on the side.

 In the mid-day border zone, there were projects that could support economic assistance to North Korea in the form of technical cooperation even before the easing of sanctions, and negotiation at the worker level was necessary. The Chinese government will maintain normal interaction and cooperation with Korea (North Korea) on the premise that it does not violate international obligations (such as the Security Council sanctions) “(Mr. Shuo Qi · so = = Deputy Press Bureau Director of the Ministry of Foreign Affairs) and It’s a posture.

North Korea’s Kim Jung-eun, the chairman of the Korean Workers’ Party, visited a cosmetic factory in Shinwigu, North Pyongan Province, which borders the mid-day border. Prior to this, he is showing a willingness to emphasize the redevelopment of the mid-North Korean border, such as visiting the area around the economic zones in the same way that it had jointly developed with China.

Source:
North Korea seeks easing sanctions Economic support consultation?
Mainichi Shimbun
2018-07-03

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Shockingly, China’s sanctions enforcement on North Korea eases after the summit

Tuesday, June 19th, 2018

By Benjamin Katzeff Silberstein

In perhaps the least surprising news there ever were, reports are now coming in regular intervals that Chinese enforcement of sanctions on North Korea is becoming less and less strict following the summit between Donald Trump and Kim Jong-un. Kim’s visit today in Beijing will likely speed up the process, but the Chinese enforcement of the sanctions regime would like have become less vigilant in due course regardless.

You’ll have to excuse the sarcastic tone of the title and content of this post, but this is precisely the sort of development that not just this blog, but a whole host of others too, have predicted all along. Trump’s idea that “maximum pressure” would survive through the summit and general process, regardless of what is decided, was always unfounded. That’s just not how these things work. Chinese enforcement of sanctions on North Korea depend much more on political circumstances in the region than on what sanctions the UNSC decides to level. China was always going to let down its guard once tensions de-escalated. Pressure could certainly get back on if things go back to the way they were earlier in the year, but to count on it as a matter of policy, as if it could be done easily or somehow automatically, is unwise or even naive.

To be sure, we shouldn’t draw any far-reaching conclusions from a small number of scattered news reports. But no one should be surprised if the number of reports continues to grow over the coming weeks, and if, one day in a not too distant future, Chinese customs figures of imports from North Korea also start to point upward.

I’ll be gathering articles on the matter in this post. First out is Radio Free Asia from a few days ago:

China is relaxing customs inspections and allowing restricted goods to flow across its border with North Korea, according to sources, despite making assurances that it will continue to enforce sanctions against the reclusive nation until it fully dismantles its nuclear arsenal.

A trader in China’s Dandong city, located in Liaoning province across the Yalu River from the city of Sinuiju in North Korea, recently told RFA’s Korean Service that inspections on trucks heading across the border to the North “have eased significantly,” and that customs officers who “used to check every single item following x-ray scans” are now searching “only around half of all vehicles.”

“In the past, when a truck driver got caught bringing restricted items on the sanctions list, the truck was impounded for a day and could only pass through the border if a fine was paid,” the source said, speaking on condition of anonymity.

“These days, those kinds of trucks [smuggling restricted goods] are fined, but can go through customs right away.”

The trader added that as customs officers have become less rigorous about their checks, “North Korean truck drivers are beginning to regularly smuggle items that are not on their manifestos.”

A resident of Dandong, who also asked to remain unnamed, told RFA that the customs process for North Koreans who travel to his city for personal reasons is also “now much easier,” noting that Chinese customs officers used to require them to open their luggage for inspection, “but they can now pass through after a routine x-ray screening.”

“Alcohol and tobacco products are limited to one bottle of alcohol and one carton of cigarettes, but the custom officers don’t make an issue out of having two or three bottles and a couple of cartons of cigarettes,” the source said.

A businessman based in Dandong, who said he exports clothing illicitly assembled in North Korea to Japan and other countries, told RFA that crackdowns on illegal trade between China and North Korea had also been reduced in recent months, making it easier for him to earn a profit.

“I use illegal vessels to send materials into North Korea and bring out processed clothes via the Yalu River, and it has been so much easier for me to operate these days,” he said.

“It always used to take me a long time to transport the clothing, due to China’s tight security along the border area, but now it doesn’t take long at all.”

Sources in Dandong and the Yanbian Korean Autonomous Region, in northeast China’s Jilin province, said that Chinese border guards ended their tight monitoring of smuggling after Kim made a rare visit to Beijing at the end of March and met with Chinese President Xi Jinping.

At that time, North Korea stopped repatriating workers it had based in China to generate foreign currency for the Kim regime, and even dispatched some additional workers to the country, the sources said.

And ever since Chinese authorities relaxed their controls on smuggling activities, they added, North Korean organizations tasked with generating foreign currency have begun steadily trafficking sanctions-restricted items into China, including iron, non-ferrous metals, chemicals, and seafood.

Trump-Kim summit

Reports of the reduced inspections follow a historic summit between U.S. President Donald Trump and North Korea’s leader Kim Jong Un, held on Tuesday in Singapore, during which Trump “committed to provide security guarantees” to the North and Kim had reaffirmed his “firm and unwavering commitment to complete denuclearization of the Korean Peninsula.”

On Thursday, U.S. Secretary of State Mike Pompeo met with his Chinese counterpart State Councilor Wang Yi in Beijing and told reporters after the talks that “China has reaffirmed its commitment to honoring the U.N. Security Council resolutions” for sanctions leveled against the North for repeated ballistic missile and nuclear weapons tests.

After Tuesday’s summit, China had suggested that international sanctions on North Korea could be lifted, but Pompeo on Thursday said Washington had “made very clear that the sanctions and the economic relief that North Korea will receive will only happen after the … complete denuclearization of North Korea.”

Full article and source:
China Relaxes Customs Inspections on Border With North Korea, Despite Sanctions Assurances
Jonhoo Kim
Radio Free Asia
2018-06-15

 

Dong-a Ilbo reports that several Chinese factories near the border, employing North Korean workers, have started operations back up after being forced to a halt due to the sanctions implementation:

More than 10 Chinese factories located in the border area between North Korea and China resumed operation around Tuesday’s U.S.-North Korea summit. The number of dispatched North Korean workers that showed a downward trend this year started increasing from last month. There are concerns that China would break away from coordination for North Korea sanctions before detailed agreements about denuclearization are concluded.

According to multiple diplomatic sources, a clothing company in Dandong, Liaoning, halted operation at the end of last year when the sanctions of the global community were strengthened but started to operate again in the middle of this month. “They hired more than five North Korean workers before resuming its operation,” said one of the sources. Among more than 600 businesses in Dandong trading with North Korea, more than 100 of them stopped operation last year but a lot of them have recently resumed operation or are preparing to do so.

The number of North Korean workers in China increased by 40 to 50 last month compared to early this year, and by more than 100 this month because of more active trade between China and North Korea. The United Nations Security Council resolution 2397, which was adopted in December last year, states that North Korean workers should return home within 24 months. China actively implemented the sanctions and sent an announcement to factories to return North Korean workers until early this year, but it reportedly has not put a pressure to send them back at all recently.

Full article and source:
More than 10 Chinese factories in border area with N. Korea resume operation
Jin-woo Shin
Dong-a Ilbo
2018-06-19

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Does the Trump-Kim summit and declaration mean anything for the North Korean economy?

Tuesday, June 12th, 2018

By Benjamin Katzeff Silberstein

The short answer is: no. One of the most notable absences from the US security perspective was that of CVID – complete, verifiable, irreversible dismantlement of North Korea’s nuclear weapons. From a North Korean perspective, diplomatic hardliners may be asking: what about sanctions relief? Neither the statement at the end, nor Trump’s press conference, gave any word on sanctions relief. The US has said that such relief will only come when CVID is completed, but to get North Korea to go along, it will likely need to make at least partial concessions along the way.

Sanctions relief may well come sooner than that in practice. No one should be under the illusion that Chinese sanctions enforcement, which has been the real key over the past ten months or so, is about adhering to international norms and UN resolutions. China evaluates whether such enforcement is beneficial to its own interests, and up until the late summer or early fall of last year, the consistent answer was “no”. With Trump’s increased pressure, that changed, as trade statistics have shown, with Chinese imports from North Korea plunging. Now that tensions have eased, China’s assessment may well ease too. We’ve already seen signs that goods as well as North Korean guest workers are once again crossing the border. Surely, China will see the Singapore summit’s very occurrence as a sign that it might be far less risky to let up more on sanctions enforcement. It will be crucial over the coming weeks and months to monitor trade flows, reported as well as unreported ones, over the Sino-Korean border.

For anyone curious about Kim Jong-un’s potential as a reformer in the economic realm, the following story by the Daily NK should be of interest:

The North Korean authorities held a video conference with high-ranking Party cadres ahead of the summit with the U.S. instructing them not to use the terms “reform and opening up.” This appears to be a precautionary measure implemented in response to the heightened expectations of North Korean residents for “greater freedoms” arising from the inter-Korean and U.S.-NK talks.

“In order to prevent ideological wavering that may occur among party executives and residents, the authorities organized a meeting on June 4 with organs directly under the authority of the Central Party Secretariat (Chairperson of the Provincial Party Committee, Chairperson of the Provincial People’s Committee, Director of the Provincial Public Security Bureau, etc.), a source in Ryanggang Province told Daily NK on June 10.

“This meeting was conducted via online video conference, hosted by the first vice director of the Organization and Guidance Department of the Central Committee of the Workers’ Party of Korea. The participants were provincial heads and secretaries across major organs, including Party and People’s Committees and the Ministry of State Security; however, the Ministry of People’s Security was not called upon to participate.”

According to the source, at the meeting, the first vice director said that the talks with the U.S. were planned out of necessity.

“He said that we shouldn’t mention reform and opening up from now on and that North Korea will never follow that path,” he explained.

“He told us to just follow our General’s (Kim Jong Un) orders and that the demolition of the Punggye-ri site does not mean we are giving up our nuclear weapons, but that it is the final step in the completion of our General’s nuclear strategy. He said that we shut down the Punggye-ri site because we have to get rid of unnecessary things.”

A source in South Pyongan Province informed Daily NK on June 10, “In a recent high-level executive meeting, there was mention that there will be absolutely no reform or opening up. We have decided not to use these terms.’”

Meanwhile, according to a separate source in Ryanggang Province, the participants of the meeting took part using computers in their own private offices. “In North Korea, there is an intranet called ‘Cheongbong Maeari (Blue Peak Echo)’, whose use by ordinary residents can be grounds for arrest, but can be used freely by party-level agency executives inside the agencies,” the source explained.

In North Korea, where internet use is restricted, it is also known that a nationwide intranet operated by the government called ‘Kwangmyong’ is commonly used. However, it is presumed that there is a separate intranet used only by party executives and government officials.

“After the announcement on the Central Committee’s video conference was made, a Provincial Party plenary meeting was held the next day. The chairperson of the Provincial Party Committee also gathered key officials in the province and urgently passed on the message of the meeting and told them to stay focused and speak and act according to our General’s plans, especially in times like this,” the additional Ryanggang Province-based source said.

“The Chairperson emphasized that regardless of how the talks go, things are going well according to our General’s plans and we should stand together more closely by our General. This video conference seems to be intended to provide assurance that North Korea will not be pushed around by the United States and to prevent unrest and confusion among party executives.”

Article source:
North Korea convenes meeting ahead of talks with U.S. to prohibit use of the terms ‘reform and opening’
Daily NK
2018-06-12

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South Korean companies gearing up to rush north

Sunday, June 10th, 2018

By Benjamin Katzeff Silberstein

These days, it seems that scarcely no South Korean company isn’t looking north. Hopes are high that with a diplomatic opening – if this time is different, which we really don’t know – North Korea will be open for business. And aside from some Chinese companies and entities, no other have the know-how and language skills to make investments in North Korea profitable. Indeed, those that have happened have largely been in the realm of “adventure capital”, that is, high risks with the potential of high rewards. It seems that relatively few have reached the latter.

Many South Korean businesses will likely ask that the government underwrite potential investments, given the vast political risk. Moon’s government doesn’t seem completely adverse to this, despite the questions it raises about moral hazard and market fairness.

Looking at the types of investments that companies are talking about, it is hardly a given that they will – if they happen – have a positive, broad impact on the North Korean system and society. See below for the sorts of investments being talked about:

SM Group said it has set up a task force to check the country’s mineral resources, particularly in iron ore. The group said its ownership of South Korea’s sole operational iron ore mine effectively gives it an edge over others in terms of processing know-how and facilities it has on hand.

North Korea’s iron ore deposits are estimated at 50 billion tons worth some 213 trillion won (US$197.7 billion).

Besides resources, companies such as Keangnam Enterprises Co. and Dong Ah Construction Industrial have said they are moving to secure a foothold in the North’s building business once all sanctions are lifted.

Dong Ah said its past experience as a builder for the defunct Korean Peninsula Energy Development Organization that moved to build a light water reactor for Pyongyang could help it win future orders, especially in power infrastructure work areas.

Keangnam said that its participation in Seoul’s Official Development Assistance program for emerging economies will make it easier for it to engage in similar projects in the North if conditions permit.

SM Line Corp said it wants to ship North Korean resources using the country’s cheap labor and explore the opening of new shipping routes and related shore infrastructure.

“Work in the North will be a win-win development for all sides, and this is the reason why the company is looking into the matter,” a source at the shipping line said.

Besides medium-size companies, the large conglomerate Lotte said it has set up a team that can expand business ties not only with North Korea but also Russia and China.

Meanwhile, there has been growing interest by local companies who want to set up operations at Kaesong Industrial Complex in North Korea, which has been shuttered following the North’s nuclear and long-range missile provocations.

Dong-a Publishing said it wanted to take advantage of the low labor costs to set up business in Kaesong.

The company said due to the labor intensive work in the publishing field it makes sense to move its plant to the North.

Related to such moves, a business group representing South Korean firms that had operated factories in Kaesong said recently that upwards of 20 companies a day have called to make inquiries about opening new factories in the special economic zone.

Article source:
S. Korean mid-tier companies interested in biz opportunities in N. Korea
Yonhap News
2018-06-10

Much of what’s being talked about, in other words, is extraction of natural resources. Sure, this would be done with North Korean labor, but even though the domestic economy could get an upswing through these sorts of operations, North Korea wouldn’t necessarily reap the full potential benefits of its mineral assets, which could be sold for much higher prices if they were locally refined and processed. This is likely something that the North Korean leadership is very well-aware of, and Kim Jong-un talked about it in speeches in the 1990s. But given the need for hard currency, they may not see that they have much of a choice in the matter.

Other companies want to get in on the cheap labor. That’s all fine and good for the companies and the potential prospective North Korean employees, but factories of this sort can be set up pretty easily without sourcing raw materials locally, and with few connections with overall North Korean society.

In other words, if these investments come to see the light of day (again, a big “if”), it’s not a given that it’ll be in any way transformative for the North Korean economy. We have seen much of this before, and we know from Kaesong that the state is indeed both capable and willing to contain economic development to specific areas, keeping it separated and in check from broader North Korean society.

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