Archive for the ‘DPRK Policies’ Category

DPRK small-scale private commerce and industry growing

Friday, July 4th, 2008

Institute for far East Studies (IFES)
NK Brief No. 08-7-4-1
7/4/2008

It appears that the number of people involved in handmade goods manufacturing, trading, and other small-scale, individual businesses is steadily increasing among North Korean citizens.

According to a source inside North Korea on June 30, ever since North Korean authorities announced the ‘Market Stimulation Measure’ in March 2003, the number of small-scale private businesses employing between 1~8 people has continued to grow as citizens in the North have taken to markets aggressively in order to earn money,

As the North’s economic woes continue to stretch over time and the government is unable to provide basic living necessities, the people are looking for other ways to support themselves.

In March of 2003, North Korea expanded farmers’ markets into general markets, allowing not only the sale of agricultural goods, but of manufactured goods as well. At the same time, the state introduced ‘market use fees’ for vendors wishing to rent space to hock their wares, thus bringing about a tax-like ‘state payment’.

Small-scale commercial and industrial businesses took on the form of family manufacturing or collaboration between factories, enterprises and engineers working together, but ‘Chinese-model’ small enterprises hiring just one or two workers also appeared.

In-home food preparation or handmade goods manufacturing, restaurants, bus services, repair work and other service-related industries grew. There also appeared examples of those leasing import rights from organizations or enterprises and making a living through trade.

Authorities have given these businesses tacit permission to operate, recognizing their role in increasing public revenue and supplying the people with daily necessities, but at the same time, they have laid down some restrictions, criticizing those “bitten by the capitalist bug, working only to make money for themselves.”

Small-scale private commerce and industry has the positive benefit of expanding the provision of daily necessities and absorbing unemployed labor in the North, but on the other hand, anti-socialist side effects such as the increasing gap between the rich and the poor and mammonism are also on the rise.

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Blame it on the weather…

Wednesday, May 28th, 2008

As with the famine that struck the DPRK in the 1990’s, known as the “Arduous March,” the North Korean government is again blaming the weather for the food shortage. 

From Reuters:

North Korea’s farm sector will take a hit due to cold weather and low precipitation this planting season, its official media said on Wednesday, after experts had warned the destitute state could be heading toward famine.

“The current spring weather has a bad effect on agriculture in the Democratic People’s Republic of Korea (North Korea),” its official KCNA news agency reported.

“The abnormal weather has seriously affected the growth of maize crops on a vast acreage of fields, cultivation of rice-seedlings and the striking of roots of rice-seedlings in the west coastal areas, the granary,” KCNA reported. 

From the Associated Press (via the IHT):

North Korea’s average high temperature in May has been about 3 degrees Celsius (5.4 degrees Fahrenheit) lower than in previous years, with temperatures in northern parts of the nation dipping below the freezing point, the official Korean Central News Agency said.

It is true that the weather is a factor, but these effects can be mitigated by better policy solutions.  Cracking down on local markets and chasing after entrepreneurs certainly does not help either.

According to Glyn Ford, member of the European Parliament:

[T]he Vice-Chair of the State Planning Comission said when I met him, “Agricultural reforms proved better than fertilizer at raising productivity.”

Read the full articles here:
Food-short N.Korea says farms hit by bad weather
Reuters
5/28/2008

North Korea says cold weather seriously affecting farming
Associated Press (via Herald Tribune)
5/28/2008

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Haggard, Weeks op-eds on DPRK food crisis

Friday, May 23rd, 2008

Newsletter from Marcus Noland
5/23/2008

Linked below are three op-eds written with Steph Haggard and Erik Weeks addressing the looming humanitarian crisis in North Korea which have appeared recently in Newsweek International, the Korean Herald, and OpenDemocracy, respectively:

“Asia’s Other Crisis” – Newsweek International
 
“Famine in North Korea? The Evidence” – Korean Herald
 
“North Korea: The Next Famine” – OpenDemocracy

 A longer policy brief addressing North Korea’s hunger issues can be accessed at:
 
“North Korea on the Precipice of Famine”
 
Finally, from the Shameless Commerce Division, Famine in North Korea: Markets, Aid and Reform will soon be released in paperback.  In anticipation, Columbia University Press is trying to reduce its inventory of the hardcover edition, and through 31 May has put the book on sale for the extraordinarily low price of $7 (the discount appears once you add the book to your shopping cart).  Act quickly while supplies last!:
 
“Famine in North Korea: Markets, Aid, and Reform” – Columbia University Press

(NKeconWatch:  With an honest sales pitch like that, you should probably buy two copies)

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Pyongyang undergoes facelift

Monday, May 19th, 2008

Pyongyang, May 19 (KCNA) — A campaign for putting Pyongyang on a new look has been vigorously launched with the approach of the 60th anniversary of the foundation of the DPRK.

The city is abustle with the work of paving most of the streets with asphalt, greening areas along streets and painting buildings.

More than 20 streets including Ryongnamsan, Ponghwa, Yongung, Changgwang and Hyoksin Streets and their sideroads and roads leading to and in parks, recreation grounds and other cultural resorts around Moran Hill and along the Taedong River have been already asphalt-surfaced.

According to the data available, the pavement project has been carried out over 50 per cent.

Great efforts are also directed to the projects for paving sidewalks with color blocks and for repairing and building infrastructure including water supply and sewage works.

The finishing touch is being given to the work of transplanting good species of trees including ginkgo and cryptomeria and flower shrubs and additionally planting turf.

Meanwhile, the project for plastering and painting buildings is also at its height.

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Hyundai projects picking up this year – still not profitable

Monday, May 19th, 2008

UPDATE: Although the Daily NK originally reported stellar growth rates in 2008 for Hyundai’s North Korea projects, today the Choson Ilbo highlights that profits are still elusive:

According to the Financial Supervisory Service on Sunday, Hyundai Asan suffered a net loss of W9.64 billion (US$1=W1,041) in the first quarter this year, three times greater than the W3.34 billion in the corresponding quarter last year.

Despite the large number of tourists, which, at 125,000 as of mid May this year, nearly doubled since last year, it is the largest loss reported since the tours to Mt. Kumgang began in 2004. Over 45,000 people have traveled to the North Korean city of Kaesong since the tour program began in December 2007, and it is almost certain that the company would reach its goal of 100,000 tourists for this year.

So what is the explanation given for this?

The reason for such struggle is the weakness of the won against the U.S. dollar, since North Korea charges admission fees to Kaesong and Mt. Kumgang in dollars — US$ 100 for one and $80 for the other per person for three days and two nights. As the dollar has risen more than 10 percent since the beginning of the year, from W940 to W 1,040, so has the initial cost. The tour program to Kaesong has reportedly gone into the red already. Moreover, Asan has to pay off $200 million of North Korean foreign debt in return for the license to develop Mt. Kumgang granted in 1999.   

ORIGINAL POST
From the Daily NK:

According to the Ministry of Unification, despite the stalemate between North and South Korea, cooperation and exchange at the civilian level have increased rapidly in the months of January to April compared to the previous year.

Compared to the same period last year, North-South trade increased by 37% (corresponding to USD 410.099 million the same period last year) and the coming and going of people and the tour of Geumgang Mountain increased by 144% and 76% respectively, contributing to a significant rise in civilian cooperation and exchange.

Related to the North-South trade, following the expansion in economic cooperation, commercial transactions (regular trade + processing of brought-in materials + economic cooperation) increased by 53.3% (to USD 531,960,000) compared to the same period last year (USD 346,990,900). Only, uncommercial trade decreased by 53.8%, recorded at USD 29,570,000 according to the reduction in aid to North Korea.

69 enterprises are operating in the Kaesong Industrial Complex as of April 2008 and 44 of them seem to be constructing factories. It is anticipated that 100-some enterprises will be operating by the end of the year.

The first quarter production volume increased 71% or by USD 6,770,000 compared to the same period last year. The export amount declined 58% to USD 13,280,000. The total number of North Korean workers is 26,885 and South Korean sojourners 1,018, the latter rising by 52.6% from the previous year, despite the evacuation of South Korean personnel.

The Mount Geumgang and Kaesong tours, compared to last year, are maintaining a huge growth rate. The number of Mt. Geumgang tourists have increased 76% to 100,510 and the Kaesong tour, which began in December of last year, logged 40,525 visitors thus far.

The number of coming and going of people, excluding the Mt. Geumgang and Kaesong Complex tourists, increased by 144% within the year to 93,019 and such a growth rate seems to have originated from the hike in visitors related to economic cooperation and North-South trade as well as the Complex itself. Only, the number of visitors related to aid to North Korea was reduced from 2,935 to 1,129.

Although the increase in tourism numbers was expected, the positive spin put on the Kaesong Zone contradicts earlier reports.  

Read the full stories here:
North and South, Politics at a Stalemate, Economic Cooperation Is Bright
Daily NK
5/14/2008
Jeong Jae Sung

Hyundai Asan Losses From N.Korea Tours Mounting
Choson Ilbo
5/19/2008

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Nobody knows how much food the DPRK needs–especially them.

Friday, May 16th, 2008

According to the Choson Ilbo:  

While the World Food Program says the North is facing a food crisis, exact statistics appear to be tough to gauge. Returning from food aid talks in the U.S., a ranking Seoul diplomat told reporters, “The U.S. also seems to be experiencing difficulties figuring out the exact food condition in North Korea, as it has to rely on remarks by North Korean officials [but] the North appears to have become more flexible on monitoring issues in the last couple of months.”

In all honesty, North Korean officials probably have no idea how much food their country needs either. Why? 

1.  North Korea’s statistical apparatus broke down a long time ago.  Production records are still kept on-site in paper notebooks. There is no comunications or computing technology to measure actual production. Throw in a few fires, floods, etc. and you are running blind.  But even if such technology existed, collective farmers, as with most factory workers in socialist systems, routinely inflate their production numbers, and the regime’s ability to detect and punish this kind of behavior is very weak–and they know it.

2. There is no commodities market in the DPRK to tell officials how much food is being produced privately.  Additionally, the paucity of communications and transportation infrastructure, combined with severe barriers to entrepreneurship, prevents North Korea’s agricultural markets from becomming as integrated as they could be.  Higher price volatility and short term scarcity are the results.  Rumors can send prices through the roof because nothing can be confirmed.

3. There has been no audit of the DPRK’s population since before the last famine, so we don’t even know how many of them there are or where they live.

In all honesty, I think we (the international community) can do a better job of determining how much food they need than they can.  Here is a great place to start.

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Peterson Institute event featuring Marcus Noland

Friday, May 2nd, 2008

On Wednesday I attended a panel discussion featuring Marcus Noland, co-author (with Stephan Haggard) of Famine in North Korea, and three North Korean defectors.  Here is the video of the event.  Below is the information on the event from the Peterson Institute website:

Press release (slightly updated w/ comments from the talk)
North Korea is once again headed toward widespread food shortage, hunger, and risk of outright famine. According to Peterson Institute Senior Fellow Marcus Noland, “The country is in its most precarious situation since the end of the famine a decade ago.”

figure-1.JPG

Click for larger view

Calculations by Noland and Stephan Haggard, University of California, San Diego, indicate that the country’s margin of error has virtually disappeared. For technical reasons, estimates produced by the United Nations’ World Food Program and Food and Agriculture Organization (total demand) probably overstate demand implying recurrent shortages year after year (figure 1 above). Noland and Haggard argue that in recent years available supply has exceeded more appropriately calculated grain requirements (adjusted total demand) but that this gap has virtually disappeared. “This is a yellow light about to turn red,” says Noland.

 figure2.JPG
Click for larger view

Food prices have almost tripled in the last year, skyrocketing at a rate faster than either the overall rate of inflation or global food prices (figure 2 above). Anecdotal reports describe a breakdown in institutions and increasingly repressive internal behavior. Noland and Haggard forecast that the North Korean regime will ultimately weather this challenge politically by ratcheting up repression and scrambling, albeit belatedly, for foreign assistance.

The North Korean food crisis, now well into its second decade, presents a difficult set of ethical choices. North Korea is critically dependent on food aid, but the government has recklessly soured its relations with the donor community. Yet in the absence of vigorous international action, the victims of this disaster will not be the culpable but the innocent. As of this writing, it already may be too late to avoid at least some deaths from hunger, and shortages of crucial agricultural inputs such as fertilizer are setting the stage for continuing food problems well into 2009.

Paper presentation
Noland discussed two recent papers, written with Haggard and Yoonok Chang, Hansei University, which are based on a pathbreaking survey of more than 1,300 North Korean refugees in China (11 different cities).  The survey provides rare and extraordinary insight into both life in North Korea and the experiences of the refugees in China.

Paper 1: Exit Polls: Refugee Assessments of North Korea’s Transition 
Results from a survey of more than 1,300 North Korean refugees in China provide insight into changing economic conditions in North Korea. There is modest evidence of slightly more positive assessments among those who exited the country following the initiation of reforms in 2002. Education breeds skepticism; higher levels of education were associated with more negative perceptions of economic conditions and reform efforts. Other demographic markers such as gender or provincial origin are not robustly correlated with attitudes. Instead, personal experiences appear to be central: A significant number of the respondents were unaware of the humanitarian aid program (40%) and the ones who knew of it almost universally did not believe that they were beneficiaries (96%). This group’s evaluation of the regime, its intentions, and accomplishments is overwhelmingly negative—even more so than those of respondents who report having had experienced incarceration in political detention facilities—and attests to the powerful role that the famine experience continues to play in the political economy of the country.

Paper 2: Migration Experiences of North Korean Refugees: Survey Evidence from China 
Chronic food shortages, political repression, and poverty have driven tens of thousands of North Koreans into China. This paper reports results from a large-scale survey of this refugee population. The survey provides insight not only into the material circumstances of the refugees but also into their psychological state and aspirations. One key finding is that many North Korean refugees suffer severe psychological stress akin to post-traumatic stress disorder. This distress is caused in part by their vulnerability in China, but it is also a result of the long shadow cast by the North Korean famine and abuses suffered at the hands of the North Korean political regime: first and foremost, perceptions of unfairness with respect to the distribution of food aid, death of family members during the famine, and incarceration in the North Korean gulag, where the respondents reported witnessing forced starvation, deaths due to torture, and even infanticide and forced abortions. These traumas, in turn, affect the ability of the refugees to hold jobs in China and accumulate resources for on-migration to third countries. Most of the refugees want to permanently resettle in South Korea, though younger, better-educated refugees prefer the United States as a final destination.

Other speakers: Several North Korean defectors also spoke as part of North Korean Freedom Week here in Washington DC.  Comments and biographies below:

Kim Seung Min: Founder and Director of Free North Korea Radio, the broadcasting program providing news and information to North and South Korea and China. Kim attended both elementary and high school in Pyongyang before serving in the North Korean Army. He escaped from North Korea to China in 1996 but was arrested and repatriated. While traveling from Onseong to Pyongyang to face punishment for leaving the country without government permission, he jumped from a moving train to escape to China again and eventually made his way to South Korea. He worked as a laborer at a coal factory in Yenji, China, until his uncle in South Korea helped him to escape to South Korea. He attended Yonsei University and Graduate School at Joong Ang University, where he received a Master of Arts degree. After serving in leadership roles in the North Korean defector groups, he founded Free North Korea Radio, which was available on the internet beginning April 2004 and began broadcasting on shortwave in December 2005 with regular daily broadcasting beginning in April 2006. (Born 5/6/62 in Jangang Do, North Korea)

*Mr. Kim was a captain in the KPA for 16 years.  He talked about how soldiers were no better off in terms of access to food than ordinary North Koreans.  Starting in 1986, the DPRK state limited food supplies to the military to only rice, leaving the generals up to their own devices for feeding the army.  This led to a break-down in discipline and now people resent the personal behavior of many soldiers who are looking for food.

Kang Su Jin:Founder and Representative of the Coalition for North Korean Women’s Rights, the only organization focused specifically on increasing awareness of the horrors facing North Korean women in China, the role of women in democratizing North Korea, empowering and encouraging North Korean women who have resettled in South Korea, and building cooperation with other organizations. Kang was a member of the elites from Pyongyang and was the Manager of Supply from 1991 to 1998 of the Bonghwasan Hotel in Pyongyang, the biggest hotel in Pyongyang, which catered to high-ranking party and army officials and was used for special events. When food distribution stopped in Pyongyang in 1996, the regime announced that all hotels had to operate on their own, and conditions became very difficult for the workers. Kang visited China and saw how much better off the people were and decided to defect to South Korea. (Born 10/23/66 in Pyongyang, North Korea)

Kim Young-il:President and Founder of People for Successful Korean Reunification (P-SCORE), an organization founded in the fall of 2006, specifically to ensure the successful reunification of the Koreas would not adversely affect the South Korean economy. To that end, PSCORE, chiefly composed of young people, studies other reunification models, informs about the human rights conditions in North Korea, and prepares and educates young North Koreans to be ready to help lead a reunified Korea. Because Kim was not born into an elite family in North Korea, he was not allowed to attend university and was destined to become a coal miner after serving his mandatory military service. While in the military he witnessed many people including soldiers dying of starvation. His own uncle died of starvation and his cousins were left to wander the streets. His family made the decision to defect to China in August of 1996 instead of starving to death in North Korea. They survived there for five years bribing the police not to turn them in until they safely defected to South Korea in January 2001. Lim received a BA in Chinese from Hankook University of Foreign Studies in August 2006. (Born 4/10/78 in Hamheung, North Korea)

*Mr. Kim still communicates with people in the DPRK on a regular basis.  He said that the price of rice inside the DPRK is sensitive to external supply shocks (or even the rumors of external supply shocks).  This means that reports of aid cut offs could result in temporary domestic price spikes even if aid is delivered.

UPDATE: Photo and coverage in the Daily NK.

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Market activity flourishes in the DPRK

Thursday, April 24th, 2008

Institute for Far Eastern Studies (IFES)
NK Brief No. 08-4-21-1
4/21/2008

The March issue of “Rimjingang”, a magazine publishing stories on life inside North Korea as reported by defectors and those still inside the DPRK, contains an eye-opening report on activities in North Korea’s markets.

Since 2003, North Korean authorities have legalized DPRK markets throughout the country. The previously existing farmers’ markets were remodeled into ‘combined’ general markets and all traders were permitted to sell their wares. After the legislation was passed, even in Pyongyang general markets emerged in each neighborhood.

According to the magazine, more than 60 markets have been set up, with each market housing around 50 traders. The use of mannequins at clothing stores and attractive price tags used to catch the eye of the shopper are in force. These days, it is not even surprising to hear cassette players extolling the virtues of a particular vendor’s goods. Sellers here do not speak abruptly to customers as they might in a State-run store. In markets, one can hear respectful language used even to children. These are not ideas taught by the labor bureau, but rather independent ideas put to use by the sellers.

Stalls selling a variety of seafood can also be found in a number of markets. Mackerel, squid and flatfish from the East Sea are among the surprisingly fresh products on display. This seafood is not on display courtesy of the North Korean government, but rather is delivered by private entrepreneurs running refrigerated trucks from the coast to Pyongyang. According to the magazine, a number of delivery services are in operation, providing goods to the highest level of North Korean society.

Around Pyongyang, a number of flower sellers have also popped up in the capitalist markets. It is custom to give flowers whenever there is an event in honor of Kim Il-sung or Kim Jong-il; but these days it is also popular for couples to give each other flowers as gifts. Even before the emergence of these markets, there was nothing that couldn’t be found in Pyongyang as long as someone had the money to purchase it.

Currently, women under the age of 39 are prohibited from working in markets, and efforts to extend this restriction to women under 49 have raised tension with many women trading in the markets. ‘Good Friends’, an organization aiding North Korea, has reported that recently thousands of women have organized in protest against security forces in the farmers’ market in Chungjin.

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Beggar social norms in the DPRK

Sunday, April 20th, 2008

From the Daily NK:

There had been eight of us in the group, including my brother. Among us, the females included myself and a 13-year old named Shin Kyung Rim. Even though we could not wash our face, were worn out, and wore ragged clothes, there were strict rules and order unique to Kotjebis (street children).

Kotjebis have leaders and areas where they beg. Also, they never eat the food they steal or receive from begging alone, but share with others.

Kotjebis, even when they sleep during the winter, seat the children, the weak, and the women in the middle and the stronger ones sleep in the periphery so that they can block the wind. People may think female kotjebis sleeping in the center of the group might be strange, but they have rules to protect women and children. If they ignore such rules, they are chased out of the group and in extreme instances, have to be prepared for death.

Read the full article here:
Want to Show the Painful Legacy Left by Kim Jong Il
Daily NK
Han Soon Hee
4/16/2008

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DPRK budget expenditures grow 2.5% this year

Wednesday, April 16th, 2008

UPDATE: Yonhap reports that the food shortage was also discussed at the cabinet meeting:

North Korea has recently convened a Cabinet meeting to discuss food shortages, China’s Xinhua News Agency said Sunday, as international concerns grow over the North’s economic woes.

The North’s Cabinet recently held an enlarged session and decided to address the chronic shortages of food and consumer goods, the news agency said, citing a recent edition of the cabinet daily Minju Joson.

DPRK budget expenditures grow 2.5% this year
Institute for Far Eastern Studies (IFES)
NK Brief No. 08-4-16-1
4/16/2008

On May 9, the sixth round of North Korea’s 11th Supreme People’s Assembly opened, at which this year’s budget expenditures were announced to be 2.5% greater than last year. It was also reported at the assembly that the Cabinet would pursue a new 5-year plan to develop the nation’s science and technology sector by 2012.

Despite officially holding a seat on the Assembly, General Secretary Kim Jong Il did not attend this year’s assembly meeting. In addition, there was no mention during the assembly of inter-Korean, U.S.-DPRK or other foreign relations.

Cabinet Deputy Prime Minister Roh Doo-chul announced this year’s budget, stating that “this year, in order to strengthen national defense, and while building strength, to decisively advance the people’s economy and existing industry as well as improve the lives of the people, the national budget expenditure plan will be expanded to 102.5% of last year.”

According to this statement, this year’s budget is estimated to be 451.5 trillion won (3.2 billion USD). An estimated 15.8%, or 71.3 billion won (510 million USD), is slated for national defense. Last year’s national defense budget was 15.7%, or 69.2 billion won (490 million USD), of the national budget.

North Korea has also decided to increase budget allocations for energy, coal, and metal industries as well as the railway sector by 49.8% as compared to 2007, and will focus investments on staple industries. In the past, the North had stressed the importance of the ‘four main sectors’ of improvement in the people’s economy, including energy, but this year the government will actually focus investment on these sectors.

Cabinet Prime Minister Kim Young-il stated, “From this year until 2012, we will proceed forward with a new 5-year plan for the development of national science and technology…As we systematically increase national investment in this sector, we will raise the sense of responsibility and the role of technicians and raise the level of science and technology development as quickly as possible.”

In 2012, North Korea will celebrate the 100th anniversary of the birth of national founder Kim Il-sung, and has set a goal of constructing an economically powerful nation by that year.

Read the Yonhap story here:
N.K. discusses food shortage in Cabinet meeting
Yonhap
4/20/2008

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